DEBATERS'  HANDBOOK  SERIES 


FREE  TRADE  AND  PROTECTION 


DEBATERS' 
HANDBOOK  SERIES 


Erilargement  of  the  United  States  Navy 
(3d  ed.  rev.  and  enl.) 

Direct  Primaries    (3d  ed.  rev.  and  enl.) 

Capital  Punishment     (2d  ed.  rev.) 

Commission  Plan  of  Municipal  Govern- 
ment   (3d  ed.  rev.  and  enl.) 

Election  of  United  States  Senators  (2d  ed. 
rev.) 

Income  Tax    (2d  ed.  rev.  and  enl. ) 

Initiative  and  Referendum  (3d  ed.  rev. 
and  enl.) 

Central  Bank  of  the  United  States 

Woman  Suffrage    (2d  ed.  rev.) 

Municipal  Ownership  (2d  ed.  rev.  and 
enl.) 

Child  Labor 

Open  versus  Closed  Shop     (2d  ed.) 

Employment  of  Women 

Federal  Control  of  Interstate  Corporations 

Parcels  Post    (2d  ed.  rev.  and  enl.) 

Compulsory  Arbitration  of  Industrial  Dis- 
putes 

Compulsory  Insurance 

Conservation  of  Natural  Resources 

Free  Trade  vs.  Protection 

Government  Ownership  of  Railroads  (2d 
ed.  rev.  and  enl.) 

Reciprocity 

Trade  Unions 

Recall 

World  Peace 

Other  titles  in  preparation 

Each  volume,  one  dollar  net 


Debaters'    Handbook   Series 


SELECTED  ARTICLES 


ON 


FREE  TRADE  AND  PROTECTION 


COMPILED  BY 
JOY    E.    MORGAN 


THE   H.   W.   WILSON   COMPANY 

WHITE  PLAINS,  N.  Y.  and    NEW  YORK  CITY 

1912 


c 


EXPLANATORY  NOTE 

Tons  of  literature,  a  poorly  informed  and  widely  misgaided 
en  general  public,  an  opportunity  for  fascinating  mental  recreation, 
?^  or  prolonged  intense  study  are  conspicuous  features  of  the  pres- 
ent tarif?  realm.  However,  interest  is  growing  and  this  book 
'^  should  afford  guidance  to  a  wide  variety  of  readers.  The  ma- 
>-  terial  here  presented  is  for  (i)  debaters,  (2)  students  of  political 
S    economy,  and  (3)  citizens  and  general  readers. 

The  book  may  well  be  used  as  a  supplementary  text  in  debat- 
ing classes.  The  brief,  tho  not  exhaustive,  will  suggest  points  of 
^  approach  upon  which  the  student  may  enlarge.  From  the  bibli- 
^  ography  much  material  has  necessarily  been  excluded.  The  bibli- 
^  ographies  listed  herein  will  be  useful  to  those  wishing  to  go 
^  deeper  into  the  subject.  They  are  easily  obtained. 
4  It  is  believed  that  this  book,  as  the  others  of  the  series,  will 

^     be    indispensable    to   libraries,    debating  classes   and    clubs,    and 
^     helpful  to  many  eager  to  be  more  intelligent  citizens. 

V 

August,  1912. 


< 


o 

t 

3 


268525 


CONTENTS 


Brief 


Bibliography 

General  References xix 

Affirmative  References xxii 

Negative    References    xxv 


Introductiox. 


General  Discussion 

Mill,  John  Stuart.     Principles  of  Political  Economy 7 

Definitions   Outlook        8 

Depew,    Chauncey   AI.      Prospects    of    Free    Trade    in    the 

United   States Nineteenth   Century       10 

Carnegie,  Andrew.    My  Experience  With,  and  Views  Upon, 

the   Tariff Century   Magazine      23 

Morgan,  Joy  E.     Protection  for  Protection 35 

Affirmative  Discussion 

Teano,  Prince  di.     Roman  Empire Nineteenth  Century  39 

Young,  John  P.    Economic  Basis  of  the  Protective  System 

Forum  44 

Republican  Presidents  on  Protection.     Home  Market  Club.  46 

Protection  a  National  Doctrine Gunton's  49 

Barri,  M.  Maltman.     Free  Trade  and  Protection 

Nineteenth  Century  58 

Blaine,  James  G.     Protection North  American  Review  68 

McKinley,  William.     Value  of   Protection 

North   American  Review  80 

Eltzbacher,  O.    Unemployment  and  Free  Trade 

Nineteenth    Century  89 

Draper,  William  F.    Should  the  Tariff  be  Revised?  Outlook  loi 

Indirect  Protection  for  England ^Minneapolis  Journal  103 


viii  CONTENTS 

Negative  Discussion 

Gladstone,  William  E.     Free  Trade 

North  American  Review    107 

Jordan,  David  Starr.  Moral  Aspect  of  the  Protective  Tariff. 

Independent     132 

Wilson,  David  H.     Re- Statements  of  Economic  Tendencies 

Westminster   Review     137 

Wright,  Harold  O.  S.     Policy  of  Free  Imports 

Westminster  Review     151 

Hamilton,  William  D.    Free  Trade  versus  Protection 

Westminster  Review     1 58 

Are  Wages  Higher? Free  Trade  Broadside     163 

Bryan,  William  Jennings.     Tariff — Help  or  Hindrance?.... 

Reader    165 

How  the  Tariff  Works Co-operation  Magazine     169 

O'Brien,   M.D.     Dishonest  Policy Westminster  Review    169 

Spread  of   Protectionism    Outlook     173 

Cause  of  Free  Trade Nation     174 

Parsons,  J.  G.     Protection's  Favors  to  Foreigners 175 


BRIEF 


Resolved,  That  protection  is  a  better  commercial  policy 
for  the  United  States  than  free  trade. 

Introduction 

I.     The  question  is  important. 

A.  It  dates  from  the  beginning  of  the  government. 

B.  It  has  been  an  important  issue  in  the  campaigns  of 

the    leading  political  parties. 
C.     Both  policies  have  been  tried. 
II.     It  is  generally  granted 

A.     That  protection  is  the  policy  of  levying  tariff  duties 

for    the    purpose    of    restricting   foreign    trade    in 

favor  of  home  industries. 
B.     That  free  trade  in  common  parlance,  is  the  policy 

of  restricting  trade  only  in   ways   non-protective 

to    home    industries,    i.    e.   the   policy    of   levying 

duties  for  revenue  only. 

III.  It  may  also  be  admitted 

A.     That  the  classes  affected   by  a  commercial  policy 
of  either  kind  are: 

1.  The   Nation,   the  people   collectively,     p^/:,'  .  ' 

2.  Producers   and   distributers,  t^       , 

3.  Consumers, 

4.  Laborers. 

IV.  The  solution  of  the  question  presents  four  main  issues. 

A.  Is  protection  beneficial  to  the  nation? 

B.  Is  it  beneficial  to  the   producers  and   distributCTS? 

C.  Is  it  beneficial  to  the  consumers? 

D.  Is  it  beneficial  to  the  laborers? 


X  BRIEF 

Affirmative 

The  afifirmative  believes  that  protection  is  the  better  pol- 
icy for  the  United  States,  for, 

I.     It  is  beneficial  to  the  nation. 

A.  It  promotes  our  industrial  welfare. 

1.  New  industries  are  encouraged. 

a.  Production   is   made   profitable. 

b.  Foreign  competition  is   restricted. 

c.  Infant  stages  are  tided  over. 

2.  Existing   industries   are  stimulated. 

a.  Production  is  made  more  profitable. 

b.  Foreign   competition  is   obstructed. 

3.  Natural  resources  are  developed. 

a.  Vegetable  and  mineral  production  is  en- 
couraged. 

4.  Wider  diversity  of  industry  is  secured. 

B.  It   promotes   our   commercial  welfare. 

1.  Internal  commerce  is  increased. 

a.  The  value  of  the  products  of  exchange  is 
kept  with  the  country. 

2.  Greater   commercial    security   is    insured. 

a.  Business  is  less  affected  by  failures  of  home 

enterprises. 

b.  It  is  less  affected  by  foreign  economic  con- 

ditions. 

c.  It   is    less   affected   by   the   trade    wars    and 

retaliatory  measures  of  other  countries. 

C.  Protection  benefits  our  social  well-being. 

1.  Higher  wages  are  paid  to  laborers. 

2.  A  greater  variety  of  occupations   is  offered. 

3.  Population  is  concentrated. 

a.     Higher   standards   of  living  result. 

D.  It  benefits   the   nation  politically. 

I.     Political  independence  is  insured. 

a.  The  nation  is  made  capable  of  producing 
what  it  needs,  which  is  absolutely  neces- 
sary in  time  of  war. 


4 


BRIEF  xi 

2.     National  prosperity  follows. 

a.  Under  protection  the  nation  has  been  pros- 

perous. 

b.  Periods  of  free  trade  have  been  periods  of 

business  depression. 
II.     It  is  beneficial  to  producers. 

A.  Farmers  are  benefitted. 

1.  Directly. 

a.     By  duties  on  farm  products  and  raw  mate- 
rials. 

2.  Indirectly. 

a.  The  increased  number  engaged  in  manufac- 

turing  decreases   the   number  engaged   in 
agriculture. 

b.  The     growth     of     cities     around     factories 

creates  a  greater  demand  for  the  products 
of  the  soil. 

c.  Manufacturing    industries    are    brot    to    the 

farmer's  door. 

B.  Manufacturers  are  benefitted. 

1.  A  better  quality   of  products  is  insured. 

a.  Because  of  the  ability  to  pay  higher  wages. 

b.  Because  of  the  opportunity  of  buying  better 

machinery   at   home. 

2.  Larger  domestic  markets  are  provided. 

a.  Home  consumption  is  increased. 

b.  Foreign   competition   is   restrained. 

3.  Better  markets  are  secured  abroad. 

a.  Manufacturers   are   enabled   better   to    com- 

pete with  foreign  producers. 

b.  Statistics     show     that     foreign     trade     has 

grown   rapidly   under   protective   tariflfs. 
III.     It  is  beneficial  to  consumers. 

A.     Consumers   are   able   to   purchase   goods    at   lower 
prices. 
I.     The  cost  of  transportation  is  reduced, 
a.     Farm  and  factory  are  brot  together. 


xii  BRIEF 

2.  The  cost  of  production  is  reduced. 

a.  Business  can  be  conducted  on  a  larger  scale. 

b.  Higher  wages  are  the  cheapest. 

c.  Invention  is  stimulated:  by  high  wages  and 

by  increased  domestic  competition. 

3.  Manufacturers'    profits   are   no   greater. 

a.     They   are    regulated    by    domestic    competi- 
tion. 

B.  The  consumer  is   relieved   of  the   burden  of  taxa- 

tion. 
I.     A  large  fraction  of  national  expenditure  is  paid 
by  foreign  exporters. 

C.  Protection  creates  a  home  market  beneficial  to  the 

consumer. 

1.  A    home    market    prevents    monopoly    and    the 

control  of  prices  by  unfair  means. 

a.  By  importers. 

b.  By  carriers. 

2.  A  home  market  is  steady  and  certain. 

3.  It  promotes  reciprocal  interests. 
IV.     Protection  benefits    the   laborers. 

A.  They  are  benefitted  economically. 

1.  The   opportunity   for  employment  is   increased. 

a.  New  industries   are  created. 

b.  The  production  of  raw  material  is  increased. 

c.  Transportation   is   developed. 

2.  Higher  wages  are  secured,  for, 

a.  The  demand  for  labor  is  larger. 

b.  There  is  a  larger  fund  for  the  payment  of 

wages. 

c.  Methods  of  production  are  improved. 

d.  Statistics  verify  this  reasoning. 

i.  Wages  are  higher  in  Protective  United 
States  than  in  the  same  occupations  in 
Free-Trade    England. 

B.  They  are   benefitted   socially. 

I.     A   higher   social   standajtd  is  maintained. 


BRIEF  xiii 

2.     Greater    opportunity    is    ofifered    for    satisfying 

natural  aptitude   in  the  choice  of  employment. 

a.     Because    industry  is  diversified  by  protection. 

Negative 

The  negative  believes  that  free  trade  is  the  better  policy 
for  the  United  States,  for, 

I.     Protection   injures   the   nation. 

A.     The  nation  is  injured  economically. 

1.  National  w^ealth  is  decreased. 

a.  National  wealth  depends  on  the  productive- 

ness  of   industr}\ 

b.  The  productiveness  of  industry  is   controlled 

by  natural  causes — human  capability,  cli- 
mate, and  resources — and  not  by  artificial 
stimulation. 

c.  Protection  diverts  industry  from  natural  to 

unnatural  pursuits  thus  losing  the  benefit 
of  natural  capacity. 

2.  The  argument  that  protection  creates   new  in- 

dustries is  untenable. 

a.  Nothing  is    created. 

b.  Capital    is    simply    transferred    from    an    in- 

dustry which  is  naturally  productive  to 
one   which    is    not. 

3.  The    argument    that    protection    diversifies    in- 

dustry is  misleading. 
a.     The   value   of  industry    depends   not   on   its 
diversity  but  on  its  productiveness. 

4.  The  argument   that  industries   are  helped   over 

ruinous  stages  is  unfounded. 

a.  If    such    industries    become   productive,    the 

cost  exceeds  the  profit. 

b.  Rarely  do  they  become  productive. 

i.     Many   of   our   oldest   industries    still    de- 
mand protection. 


dv  BRIEF 

S.  There  is  no  more  reason  for  restricting  trade 
between  nations  than  there  is  for  restricting 
it  between  states   or  between  counties. 

B.  The  nation  is  injured  socially. 

1.  Monopolies  are  fostered. 

a.  Foreign   competition,  the   safeguard  against 

domestic   monopoly,   is   restricted. 

b.  The  most  burdensome  monopolies   are   the 

ones    that    have    benefitted    most    by    the 
tariff. 

2.  Protective    class    legislation    fosters    caste    and 

results    in    inequality    and    injustice, 
a.     A   large   fraction   of  our   immense   fortunes 
were  made  in  protected  industries   at  the 
expense    of    the   poorer    class. 

C.  The  nation  is   injured  politically. 

1.  Our  fiscal  standing  is  uncertain. 

a.  Surpluses   in   the    treasury  lead   to  extrava- 

gance. 

b.  Deficits  hamper  the  government. 

2.  Corruption  is   fostered. 

a.  Large  amounts  are  expended  by  interested 
parties  in  securing  favorable  tariff  legisla- 
tion. 

3.  International   ill  feeling  is  aroused. 

a.  Other  nations  are  offended  by  our  tariff 
laws    and    retaliate. 

4 National   advancement  is    checked. 

a.     Advancement    can    come    only    thru    mutual 
interchange  and  good-will. 
II.     Protection  injures  producers  and  distributers. 
A.     Manufacturers  are  injured. 

I.     Their  market    is   restricted. 

a.  Tariff  duties  decrease  the  volume  of  imports. 

b.  Decrease  in  the  volume  of  imports  decreases 

exports. 
i.     Commodities    exchange    only    for    com- 
modities. 


BRIEF  XV 

c.     Other  nations  retaliate. 
i.     By    high   tariffs, 
ii.     By  bounties. 
iii.     By  inspection   laws, 
iv.     By  patent  laws. 
V.     By   trade    combinations, 
vi.     By  ship  subsfdies. 
2.     Larger    markets    are    needed. 

a.  In  many  fields  the  home  market  is  exhaust- 

ed, 
i.     Production  exceeds  consumption. 

b.  Foreign   markets    are    especially    desirable, 
i.     They   steady   competition. 

ii.     They    sustain    trade    in   times    of    depres- 
sion at  home, 
iii.     They   afiford   large    opportunities   for   in- 
crease with  the  consequent  lower  cost 
of  production. 
Farmers  are  injured   by  protection. 

1.  The  market  for  agricultural  products  is  restrict- 

ed. 

2.  The  farmers'  protection  is  of  little  value. 

a.  A    large    fraction    of    his    products    is    not 

affected   by    foreign    competition, 
i.     The  cost  of  transportation  is  prohibitive. 

b.  Much  of  the  remainder  is  not  helped  by  im- 

port duties, 
i.     It  is  disposed   of  in   the  world's  market 
where   the   price   is   fixed. 

c.  The  only  farmer  benefitted  by  protection  is 

the  one   on  the  national  boundary. 

3.  Any  possible  advantage  to  the  farmer  is  more 

than  offset  by  the  additional  cost  of  the  pro- 
tected articles   he  consumes. 

Distributers  are  injured. 

I.  The  higher  price  of  protected  articles  requires 
a    larger    capital. 


xvi  BRIEF 

a.     The  interest  in  the  difiference  in  cost  result- 
ing from  protection  is  a  large  and  direct 
loss. 
III.     Protection    injures    consumers. 

A.  The  tariff  is  a  tax  on  consumers. 

1.  The  consumer  pays  higher  prices  on  all  articles 

of  daily  use  which  correspond  roughly  to  the 
import   duty   on  those  articles. 

2.  In  certain  cases  a  double  tax  is  paid. 

a.     One    on   the   raw   material   and   one   on   the 
finished   product. 

B.  More  of  the  tax  paid  by  the  consumer  goes  to  the 

manufacturer  than  to  the  government. 

1.  Many  of  the  articles  of  domestic  production  can 

be  bot  cheaper  abroad  than  at  home. 

2.  The  argument  that  importers  pay  taxes  is  un- 

sound, 
a.     What  he  pays  as  duty  he  adds  to  the  cost  of 
the    goods    and   collects   as   a  part   of  the 
price  to  the  consumer. 

C.  The  tariff,  as  taxation,  injures  the  consumer. 

1.  Its  incidence  is  concealed. 

2.  It  gives  rise  to  fraud  and  corruption, 
a.     To  smuggling  and  bribery. 

3.  It  causes  favoritism  by  officials. 

a.     Campaign    funds    are    exchanged    for    tariff 
concessions. 
IV.     Protection   injures  laborers. 

A.     It    ultimately    lowers    wages. 

1.  The    fund    from    which   wages    are    paid   is    de- 

creased, 
a.     Labor  and  capital  are  attracted  into  unpro- 
ductive   industry    where    they    create    less 
wealth. 

2.  The   argument  that  protection   raises  wages  is 

refuted  by  statistics. 
a.     Wages   are  as  high  in   unprotected  as  pro- 
tected  industries. 


BRIEF  xvii 

b.  Before    protective  tariffs  were  adopted  wages 

were  higher  in  America  than  abroad. 

c.  Wages    do    not    rise    and    fall    as    the    tariff 

changes. 

d.  Wages    are     higher    in    England    under    free 

trade    than   under  protection. 

e.  Wages    are    higher    in    England    under    free 

trade  than  they  are  on  the  Continent,  un- 
der protection. 

B.  Protection   increases   the   cost   of  living. 

I.     Laborers   pay   higher  prices   for   nearly    all   ar- 
ticles  of   daily   consumption. 

C.  The  argument  that  the  tariff  protects  wage  earners 

from  the  competition  of  the  pauper  labor  of  Eu- 
rope is  false. 

1.  The    tariff    does    not    keep    pauper    labor    from 

American    shores. 

2.  The    American    laborer    because    of    his    higher 

efificiency  is  cheaper  than  the  less  skilled  la- 
borer of  other  countries. 

3.  Under  the  regime  of  protection  American  capi- 

talists   have    established    duplicate    factories 
abroad  disregarding  the  rights  of  American 
labor, 
a      The    retaliatory    tariffs    of    other    countries 
have  made  this  necessary. 


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United  States  Industrial  Commission.  Report,  v.  19.  See  In- 
dex. 

United  States  Special  Consular  Reports,  v.  16.  Parts  i,  2 
and   3. 

Magasine  Articles 

Annals  of  the  American  Academy.  23 :  26-42.  Ja.  '04.  Pro- 
tection, Expansion,  and  International  Competition.  W. 
G.    Langworthy   Taylor. 

Annals  of  the  American  Academy.  32:265-70.  S.  '08.  Tariff 
Revision  a  Public  Necessity.    D.  M.  Parry. 

Annals  of  the  American  Academy.  32:315-20.  S.  '08.  Tariff 
Revision  and  Protection  for  American  Labor.  John  R. 
Commons. 

Annals  of  the  American  Academy.  32:394-8.  S.  '08.  Tariff 
Making — Facts  and  Theory.    H.  E.  Miles. 

Annals  of  the  American  Academy.  32:434-9.  S.  '08.  Argu- 
ment for  a  Permanent  Expert  Tariff  Commission.  H.  E. 
Miles. 

Annals  of  the  American  Academy.  42:334-9.  Jl.  '12.  Fisher's 
"The  Purchasing  Power  of  Money."     W.  G.  L.  Taylor. 

Arena.  30:  585-90.  D.  '03.  Relation  of  Reciprocity  to  Protec- 
tion.   Edwin  Maxey. 

*Century  Magazine.  77:  196-205.  D.  '08.  My  Experience  With, 
and  Views  U^pon,  the  Tariff.     Andrew  Carnegie.  , 

An  especially  good  history  of  the  development  of  the  steel  in- 
dustry in   America  in   its   relation   to   the   tariff. 

Congressional  Record.  Consult  the  following  dates:  Jl.  '03; 
My.  26,  29,  '08;  Ja.  7,  F.  27,  Mr.  27,  Ap.  5,  7,  9,  My.  6,  26, 
Jl.  13,  16,  '09;  Mr.  22,  Je.  I,  21,  '10,  et  al. 

For  further  references  consult  price  list  37,  Superintendent  of 
Documents,    Washington,    D.    C. 

Contemporary  Review.  86:  18-31.  Jl.  '04.  German  Professors 
and   Protectionism.     Edward   Bernstein. 

Contemporary  Review.  87:835-43.  Je.  '05.  Argument  for  Pro- 
tection.    Hilaire    Belloc. 

Forum.  6:276-85.  N.  '88.  How  the  Tariff  Affects  Industry. 
W.   C.   P.   Breckinridge. 


xxii  BIBLIOGRAPHY 

Journal  of  Political  Economy.  17:  153-7-  Mr.  '09.  Cost  of  Pro- 
duction as  a  Basis  of  Tarifif  Revision.     John  Ciimmings. 

Ladies'  Home  Journal.  29:23.  Ja.  '12.  How  Does  the  Tariff 
Touch   Me  as  a  Woman? 

Nation.     54:481-2.    Je.  30,  '92.     Is  Protection  Gaining  Ground? 

Nation.    92:389-90.  Ap.  20,  '11.    Sancta  Simplicitas. 

New  England  Magazine.  33 :  459-67.  D.  '05.  Publicity  for  Pro- 
tected Interests.    R.  L.  Bridgman. 

*Xineteenth  Century.  35 :  343-52.  F.  '94.  Prospects  of  Free 
Trade  in  the  United  States.     Chauncey  M.  Depew. 

Nineteenth  Century.  68:381-8.  S.  '10.  Free  Trade  in  Its  Re- 
lation to   Peace  and  War.    E.   P.   Cromer. 

North  American  Review.  180:381-93.  Mr.  '05.  International 
Aspect  of  Our  Tarifif  Situation.    N.  I.  Stone. 

North  American  Review.  190:57-66.  Jl.  '09.  Permanent  Tariff 
and   Efficient   Revenue    System.    Willard    French. 

*Outlook.    92:264-5.  My.  29,  '09.    Definitions. 

Popular  Science  Monthly.  14:389-92.  Ja.  '79.  Protection  and 
Socialism. 

Popular  Science  Monthly.  38:48-60.  N.  '90.  Logic  of  Free 
Trade  and   Protection.    Arthur  Kitson. 

Westminster  Review.  172:570-5.  N.  '09.  Fair  Trade  versus 
Free  Trade.    Dudley   Sydney  Ashworth   Crosby. 

Affirmative  References 
Books,  Pamphlets  and  Documents 

Barker,  J.  E.     loi  Points  Against  Free  Trade,  1909. 

Superintendent   of  Documents.     Washington,   D.    C.     Five   cents. 

Bliss,  W.  D.  P.    New  Encyclopedia  of  Social   Reform.   1908. 
pp.   986-94.     Protection.    Albert    Clarke. 
A  careful   general  survey. 

Byles,  J.  B.  Sophisms  of  Free  Trade.  Ed.  10.  America  Pro- 
tective   Tarifif   League.     1908. 

Cannon,  Joseph  G.  Speech  before  the  National  Association  of 
Manufacturers   in   New   York,   May   18,    1910. 

Carey,  H.  C.    Principles  of  Social  Science. 


BIBLIOGRAPHY  xxiii 

Cunningham,  W.  Rise  and  Decline  of  the  Free  Trade  Move- 
ment.   Ed.   2.    Putnam.     1907. 

Denslow,   Van   Buren.    Principles   of    Political    Philosophy. 

Dingley,  Edward  N.  Life  and  Times  of  Nelson  Dingley,  Jr. 
American  Protective  Tariff  League.    1908. 

Fordney,  J.  W.  \'ital  Issue  Before  the  American  People. 
American  Protective  Tariff  League.    1888. 

Hillier,  A.  P.  Commonweal:  A  Study  of  the  Federal  System 
of  Political   Economy.    Longmans.     1909. 

Holt,  Henry  M.  Protection  versus  Free  Trade.  Appleton. 
1888. 

Laylor,  J.  J.    Cyclopedia  of  Political  Science.  3:413-40. 

List,   Friedrich.    National   System   of   Political   Economy. 

Palgrave,  R.  H.  Inglis.  Dictionary  of  Political  Economy.  3: 
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Patten,    S.    N.     Economic    Basis   of    Protection. 

Payne,  Sereno  E.  Speech  in  the  National  House  of  Repre- 
sentatives.   Thursday,   May   12,   1910. 

Roberts,    E.    H.     Government    Revenue. 

Stebbins,  G.   B.    American   Protectionist's  Manual. 
For   sale   by  American   Protective   Tariff  League. 

Thompson,  R.  E.  Harvard  University  Lectures  on  Protection 
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1908. 

United  States.  Senate  Document.  164.  6ist  Congress.  2d  ses- 
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sota.   September    17,    1909. 

Young,  John  P.  Protection  and  Progress.  American  Protec- 
tive Tariff  League.    1908. 

Magazities 

American  Economist. 

A  periodical  devoted  to  protection.  Published  weekly  bv  the 
American  Protective  Tariff  League.  New  York  City.  Each  "issue 
contains    list    of    the    League's    publications. 

Arena.  33:547-8.  My.  '05.  Facts  about  High  Protection,  Re- 
action and  Militarism. 

Atlantic.  36:298-315.  S.  '75.  National  Self  Protection.  Joseph 
Wharton. 


xxiv  BIBLIOGRAPHY 

Belford's    Magazine.   97:390-4.     Why    I    Am   a    Protectionist. 

H.  K.  Thurber. 
Century.  82:  143-6.   My.  '11.    A   B    C  of  the  Tariff  Question. 

Andrew   Carnegie. 
P'ortnightly  Review.    74:49-66.  Jl.  '03.    Free  Trade  or  Protec- 
tion?   John  Beattie  Crozier. 
Fortnightly   Review.    78:453-68.    S.   '02.     Fiscal    Problems   of 

Today.    G.   Byng. 
Forum.  4:  582-94.   F.  '88.    How  Protection  Protects.    William 

D.   Kelley. 
*Forum.  30:430-5.  D.  '00.    Economic  Basis  of  the  Protective 

System.    John  P.  Young. 
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*Gunton's  Magazine.  23:465-75.  D.  '02.    Protection  a  National 

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*Gunton's  Magazine.    26:252-4.  Mr.  '04.    Some  Moral  Aspects 

of    Protection. 
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Protection — From    the    Workman's    Point    of    View.     M. 

Maltman  Barrie. 
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Some   Noticeable  Facts  and   Extracts.    O.   Eltzbacher. 
^Nineteenth  Century.    58:884-99.  D.  '05.    Unemployment  and 

the  'Moloch  of  Free  Trade.'    O.  Eltzbacher. 
*Nineteenth   Century.    64:181-5.  Ag.  '08.    Roman   Empire:  A 

Lesson  on  the   Effects  of  Free  Trade.    Prince   di  Teano. 
Nineteenth  Century.    68:915-30.  N.  '10.    Theory  of  American 

Protection.    M.  Trewen. 
North  American  Review.  139:372-402.  O.  '84.    Benefits  of  the 

Tariff    System.     John    Booth.     Robert    Ellis    Thompson. 

Nelson  Dingley. 

Furnishes  interesting  material  on   tiie  history   of  the   tariff. 
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kets.   Allen  Thorndike  Rice. 


BIBLIOGRAPHY  xxv 

*North    American    Review.     150:27-54.    Ja.    "go.     Protection. 

James  G.   Blaine. 
North  American  Review.    150:281-300.  Mr.  '90.    Free  Trade  or 

Protection.    Justin    S.   Morrill. 
*North  American  Review.    150:  740-8.  Je.  '90.    Value  of  Pro- 
tection.    William    McKinley. 
North  American  Review.    175:746-55.  D.  '02.    What  Shall  We 

Do    With    the    Tariff?      Thomas    B.    Reed. 
North  American  Review.    189:  194-202.  F.  '09.    Future  of  the 

Tariff.    Robert  P.  Porter. 
*Outlook.   79:432-40.  F.  18,  '05.   Should  the  Tariff  be  Revised? 

Opposing   Arguments.     William    F.    Draper.     William    D. 

Washburn. 
Outlook.    90:765-7.    D.   5,   '08.     Protection   for   What? 
Protectionist.    Published  monthly  by  the  Home  Market  Club. 

Boston. 
Reader.    11:73-81.  D.  '07.    Tariff — Help  or  Hindrance?   Albert 

J.    Beveridge. 
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Atkinson,  Edward.  Facts  and  Figures  the  Basis  of  Economic 
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Bastiat,  Frederic.    Fallacies  of   Protection.    Putnam.     1909. 

Bastable,    Charles    Francis.     Comm.erce    of    Nations. 

Bengough,  J.  W.  Whole  Hog  Book,  or,  A  Dry  Subject  Made 
Juicy;  being  George's  thoro  going  work,  "Protection  or 
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Bigelow,  John.  Folly  of  Building  Temples  of  Peace  with 
Untempered  Mortar;  the  Necessity  of  Building  Temples 
of  Peace  with   Tempered   Mortar.     Huebsch.     1910. 

Bliss,   W.   D.    P.    New   Encyclopedia   of   Social   Reform,    pp. 
511-24.    1908.     Free  Trade  in  the   United  States.     John   De- 
Witt  Warner. 
An  excellent  general  survey  of  the  arguments  and   theories. 

Bolen,  G.  L.    Plain  Facts  as  to  the  Trusts  and  the  Tariff. 


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Brassy,  Earl.  Sixty  Years  of  Progress  and  Fiscal  Policy. 
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Bridgman,  R.  L.  Passing  of  the  Tariff.  Sherman,  French  & 
Company.     1909. 

Cox,  Harold.  British  Industries  Under  Free  Trade.  Unwin. 
London.     1903. 

Dixon,  Lincoln.  Speech  in  National  House  of  Representa- 
tives.   Wednesday,   May  27,   1908. 

Ehrich,   L.  R.    Free  Trade  versus  a  Revenue  Tariff.    191 1. 
Sent   free   from   463   oth  Ave.    New  York    City. 

Free  Trade  Broadside.  American  Free  Trade  League.  Bos- 
ton. 

A    quarterly    periodical    aimed    at    the    overthrow    of    the    pro- 
tective  system. 

George,  Henry.  Protection  or  Free  Trade;  an  Examination 
of  the  Tariff  Question  with  Especial  Regard  to  the  Inter- 
ests  of   Labor. 

Hadley,  A.  T.    Economics,  pp.  421-41. 

Hoar,  Roger  Sherman.  Tariff  Manual.  Twenty-five  cents. 
American    Free  Trade   League.    Boston. 

Jordan,   David  Starr.    Fate  of  Iciodorum.    Holt.    1909. 

Lalor,  J.  J.    Cyclopedia  of  Political  Science.    2:289. 

Mangold,  George  Benjamin.  Labor  Argument  in  the  Ameri- 
can Protective  Tariff  Discussion.  Paper.  Thirty-five  cents. 
University  of  Wisconsin.    1908. 

Nesbit,  P.  Mr.  Brown,  the  Tariff  Teacher.  Brown  and  Com- 
pany.   Oklahoma  City.    1910. 

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Economics   of  Imperialism.    Macmillan.     1910. 

Palgrave,  R.  H.  Inglis.  Dictionary  of  .Political  Economy.  2: 
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*Parsons,  J.  G.  Protection's  Favors  to  Foreigners.  Ten 
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Stanwood,  Edward.  American  Tariff  Controversies  in  the 
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64:  473-88.  Jl.  '07;  67:  437-49.  Mr.  '09;  67:  578-86.  Ap.  '09;  68: 
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Articles  selected   from  a  series  now  published   in  book   form  by 
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the  Export  Trade  of  the  United  States.    S.  N.  D.   North. 
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Bridgman. 
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Protectionism.    J.   A.    Hobson. 
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Man  and  Protection.    William  Harbutt  Dawson. 
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Trade  and  Its  Fruits.    J.  A.  Spender. 
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William  R.  Morrison. 
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Means.    David  A.   Wells. 
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Louis   Windmiiller. 
*Free   Trade   Broadside.     Issued   quarterly  by   the   American 

Free  Trade  League.    Boston. 


xxviii  BIBLIOGRAPHY 

^Independent.  65:1209-11.  N.  26,  '08.  Moral  Aspects  of  the 
Protective    Tariff.     David    Starr    Jordan. 

Independent.  68:  392-5.  F.  24,  '10.  Tariff  and  the  Cost  of  Liv- 
ing.   B.  W.  Holt. 

Independent.  68:741-2.  Ap.  7,  '10.  Cost  of  Food  Under  Free 
Trade  and   Protection.    J.   D.  Whelpley. 

Nation.  85:  367-8.  O.  24,  '07.    Protection  Falling  into  Disrepute. 

Nation.  86:214.  Mr.  5,  '08.  Protection  the  Mother  of  Social- 
ism.   William  Roscoe  Thayer. 

*Nation.  87:  130-1.  Ag.  13,  '08.    Cause  of  Free  Trade. 

Nation.  87:227-8.   S.   10,  '08.    Hankering  for  Protection. 

Nation.  88:436.  Ap.  29,  '09.  Wheat  Corners  and  the  Protec- 
tive Tariff. 

North  American  Review.  136:  270-6.  Mr.  '83.  Protective  Taxes 
and  Wages.    W.  G.   Sumner. 

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iff System.    David  A.  Wells. 

*North  American  Review.  150:  1-27.  Ja.  '90.  Free  Trade.  Wil- 
liam  E.    Gladstone. 

North  American  Review.  150:  145-76.  F.  '90.  Gladstone-Blaine 
Controversy.     Roger   I.    Mills. 

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eigners. 

*Outlook.  92:349-50.  Je.   12,  '09.    Spread   of  Protection. 

Popular  Science  Monthly. '34:  1-19.  N.  '88.  Effects  of  Protec- 
tion.    Charles    S.    Ashley. 

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Pauper  Labor  Argument  for  Protection.    David  A.  Wells. 

*Reader.  10:612-8.  N.  '07.  Tariff  for  Revenue  Not  for  Pro- 
tection.    William   Jennings    Bryan. 

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Protectionists'  Arguments. 

*Westminster  Review.  161:254-67.  Mr.  '04.  Dishonest  Policy; 
Injuring  the  Many  to  Benefit  the  Few.    M.  D.  O'Brien. 

Westminster  Review.  163:  121-5.  F.  '05.  Protection  and  For- 
eign Investments.    W.  M.    Lightbody. 


BIBLIOGRAPHY  xxix 

Westminster   Review.    163:126-31.    F.   k)5.     Some    Results    of 

Free    Trade    in    England    and    Protection    in    the    United 

States.    Anthony    Pulbrook. 
Westminster  Review.   163:253-65.  Mr.  '05.    Free  Trade,   Free 

Land  and  Peace.    Arthur  Withy. 
Westminster  Review.   163:477-87.   My.  '05.    Free  Trade,   Not 

Preference,  the  True  Basis  of  Empire.    Paul  E.   Roberts. 
♦Westminster  Review.    164:  124-34.    Ag.    '05.     Re-Statements  of 

Economic  Tendencies.    David   H.   Wilson. 
*Westminster  Review.    164:135-45.   Ag.    '05.   Free  Trade  versus 

Protection.    William  D.  Hamilton. 
Westminster  Review.  164:237-48.  S. '05.    Fair  Trade:  What  is 

It?    David  H.  Wilson. 
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J.  Stewart. 
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ports and  the  Work-for-all  Arguments  of  its   Opponents. 

Harold  O.  S.  Wright. 
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Collier  Monkswell. 
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for  the  Man  on  the  Street.    Bickerton  Pratt,  Jr. 


SELECTED  ARTICLES  ON 
FREE  TRADE  AND  PROTECTION 


INTRODUCTION 

Free  Trade 

The  term,  "free  trade,"  has  borne  various  meanings.  At 
present  the  term  designates  trade  that  is  either  entirely  un- 
restricted or  restricted  only  in  ways  non-protective  to  home 
industries.  No  government  has  attempted  the  former.  The 
latter  has  been  realized  in  the  policy  of  the  United  King- 
dom, v^^here  it  was  introduced  in  1869. 

United  Kingdom 

England's  trade  restrictions  in  the  form  of  duties  affect 
(l)  goods  produced  unprofitably  in  England,  for  climatic 
reasons,  (2)  tobacco,  a  commodity,  the  production  of  which 
is  prohibited  in  the  United  Kingdom,  (3)  alcoholic  spirits, 
the  duties  on  which  are  exactly  offset  by  internal-revenue 
duties.  It  may  be  seen  that  these  restrictions  are  carefully 
so  arranged  as  to  contain  no  trace  of  protection. 

Progress  and  the  Division  of  Labor 

A  leading  cause  of  the  industrial  progress  of  the  world 
is  the  division  of  labor  and  the  accompanying  specialization 
and  organization.  Many  specialists,  working  in  separate 
fields  with  the  consequent  intersharing  of  products,  can  pro- 
duce vastly  more  in  a  given  time  than  the  same  number,  each 
producing   for   himself   the   things   he   requires.     This    great 


2  FREE  TRADE  AND 

increase  in  the  quantity  of  work  possible  to  the  same  number 
of  people  because  of  the  division  of  labor  is  due  (i)  to  the 
increase  in  skill  attained  by  each  workman  in  consequence 
of  more  practice  in  his  special  field,  (2)  to  the  saving  in  time 
otherwise  lost  in  passing  from  one  kind  of  work  to  another, 
and  (3)  to  the  invention  of  improved  machinery,  which 
enables  one  man  to  do  the  work  of  many.  The  opportunity 
to  exchange  one's  special  products  for  the  needed  products 
of  others  is  one  condition  of  the  division  of  labor.  With  no 
exchange  division  of  labor  would  be  impossible.  With  ex- 
change entirely  free  division  of  labor  has  its  widest  exten- 
sion. 

Nations  as  Specialists 

Not  only  individuals,  but  states  and  nations,  may,  in  a 
sense  be  specialists.  The  nation,  as  the  individual,  has  a 
natural  bent  and  is  better  fitted  for  production  in  certain 
lines  than  in  others.  The  reasons  that  make  freedom  of 
exchange  within  a  country  advantageous,  render  desirable 
freedom  of  trade  between  countries.  The  essential  nature  of 
exchange  and  society's  benefit  therefrom,  are  the  same  if 
one  party  be  Smith  and  the  other  Jones,  as  if  one  party  be 
Germany  and  the  other  Fr.ance.  In  either  case  commodities 
less  desired  are  given  for  commodities  more  desired,  to  the 
mutual  advantage  of  the  parties  concerned.  So  from  free- 
dom of  trade  between  nations  there  results  a  "territorial 
division"  of  labor  by  which  each  part  of  the  world  pursues 
those  industries  to  which  it  is  naturally  adapted  and  thereby 
increases  immensely  the  aggregate  productiveness  of  the 
world's  labor  and  capital.  The  larger  the  freedom  of  trade, 
the  greater  the  inducement  to  each  country  to  use  its  labor 
and  capital  in  ways  calculated  to  contribute  most  to  the 
world's  wealth. 

Protection  not  Profitable 

Protective  duties  divert  labor  and  capital  from  unprotected 
industries,    the    natural    field    of    investment,    to    the    protected 


PROTECTIOX  3 

industries.  This  curtails  production.  That  the  protected  in- 
dustry needed  and  continues  to  require  encouragement,  is 
complete  proof  that  it  is  carried  on  at  a  national  loss.  This 
national  sacrifice,  unless  justified  by  sufficient  reasons,  con- 
demns protection. 

Protection  and  Corruption 

Protection  is  dangerous  on  political  grounds.  It  gives  to 
a  favored  group  of  men  an  immense  pecuniary  interest  in 
the  national  legislation  and  subjects  legislators  to  corrupting 
influences  from  which  they  ought  to  be  exempt.  The  forms 
of  corruption  range  in  ingenuity  from  certificates  of  de- 
posit to  the  loan  of  favorite  corporation  secretaries  to  in- 
fluential members  of  congress. 

Protection  and  Business 

Protection  to  be  just  must  continually  change  in  adapta- 
tion to  changing  industrial  conditions.  These  arbitrary  fluc- 
tuations are  injurious  and  sometimes  disastrous  to  business 
thruout  the  country.  Conservative  business  men  have  esti- 
mated the  loss  incident  to  the  uncertainty  of  tariff  revision 
at  one  million  dollars  per  day.  Large  manufacturing  enter- 
prises dare  not  manufacture  in  excess  of  the  immediate  de- 
mands when  in  danger  of  a  reduction  of  import  duties  on 
competing  products. 

Protection    and    Panics 

The  enemies  of  free  trade  have  pointed  to  the  attempts 
at  its  adoption  in  America  as  a  fruitful  source  of  panics. 
This  relation,  if  it  exists,  condemns  free  trade  less  than 
protection.  Business  uncertainty  is  due  (i)  to  fear  that 
Congress  vvill  decrease  the  amount  of  protection,  (2)  to  the 
manipulation  of  our  wealth,  by  the  few  who  have  come  to 
control  so  large  a  fraction  of  it,  so  as  to  coerce  Congress 
into  continued  or  further  protection  by  threatening  a  panic 
certain  to  mortgage  the  success  of  the  party  in  power.  This 
fear  of  retaliation  has  enabled  predatory  wealth  to  exert  an 


4  FREE  TRADE  AND 

alarming  intiuence  in  national  politics.  The  causes  of  panics, 
therefore,  spring  from  protection,  not  free  trade.  Free  trade 
should  be  adopted  by  degrees  and  after  careful  warning. 
The  policy  established,  business  stability  would  be  free  from 
the  shocks  of  tariff  revision. 

Protection   and   Pauper   Labor 

It  is  argued  that  free  trade  forces  home  labor  to  compete 
with  foreign  labor,  whose  standard  of  living  is  lower,  in  that 
products  made  by  cheap  labor  compete  with  products  manu- 
factured by  labor  of  a  higher  class.  This  argument  with  its 
grain  of  truth  has  deluded  laboring  people  into  supporting 
protection. 

In  the  first  place  under  a  policy  of  free  trade  the  home 
laborer  in  buying  foreign  products  would  not  compete 
directly  with  foreign  labor  because  the  cost  of  transportation 
is  in  itself  partial  protection.  Then  again,  under  free  trade 
the  greater  buying  power  of  money,  would  render  a  rela- 
tively lower  wage  absolutely  higher  than  uader  a  regime  of 
protection.  Under  an  era  of  protection  assume  a  man's 
earning  capacity  to  be  500  dollars  per  year  and  his  living- 
expenses  to  be  300  dollars.  Assume  that  when  the  tariff 
wall  is  removed  his  earning  capacity  in  competition  with 
cheaper  labor  drops  to  450  dollars.  It  is  highly  probable 
that  his  living  expenses  would  then  drop  to  225  dollars  on 
account  of  the  greater  purchasing  power  of  money  under  the 
free  trade  policy.  The  laborer  is  benefitted  by  the  change. 
As  a  matter  of  fact,  labor  is  not  stationary,  but  moves  from 
one  country  to  another.  Capital  everywhere  seeks  the  labor 
that  brings  the  largest  returns  for  the  minimum  expenditure 
and  whether  the  national  commercial  policy  be  restriction 
or  non-restriction,  home  labor  must  compete  with  foreign 
labor. 

Under  protection  foreign  labor  is  attracted  to  our  own 
shores,  sometimes  at  the  expense  of  our  national  ideals  and 
standards  of  living,  and  forces  home  labor  into  a  competi- 
tion more  dangerous  than  the  competition  of  products  made 


PROTECTION  5 

by  the  same  tj^pe  of  toil  under  the  less  favorable  conditions 
of  foreign  lands. 

In  general,  facts  show  that  high  wages  and  high  efficiency 
are  companions,  whereas  low  wages  are  accompanied  by  low 
efficiency.  Mr.  North,  a  former  director  of  the  United  Stafes 
census,  asserts:  "That  American  manufacturers  are  not 
greatly  handicapped  by  the  higher  wages  here  because  man 
for  man,  the  average  American  -workman  can  accomplish 
more  in  a  given  time  and  do  better  work  than  the  average 
workman  of  any  other  country,"  which  ofifsets  largely  the 
difference  in  wages  between  our  own  and  other  countries. 

Protection   and   JVar 

Protection  as  a  revenue  measure  in  time  of  war  is  a  mis- 
nomer for  insofar  as  it  yields  revenue  to  the  government  it 
ceases  to  protect  home  industries.  Foreign  articles  must  be 
imported,  must  displace  articles  made  at  home,  if  they  are  to 
yield  revenue.  However,  so  long  as  war  is  a  possibility,  no 
nation  can  afford  to  become  entirely  dependent  on  other 
nations  for  its  more  important  products.  Such  dependence 
would  enable  other  nations  to  weaken  their  adversary  by 
stopping  commerce.  For  example,  America  can  hardly  be- 
come dependent  on  Great  Britain  for  her  ships  even  tho  it 
be  more  expensive  to  manufacture  them  at  home.  The  add- 
ed expense  is  justified  by  the  increased  safety. 

Infant   Industries 

That  it  is  desirable  to  protect  industries  in  their  infancy 
has  been  conceded  by  many  who  oppose  protection  as  a 
general  principle.  It  is  generally  believed  that  the  lower 
price  of  British  steel  would  have  prevented  the  development 
of  the  American  steel  industry  had  it  not  been  protected. 
After  a  period  of  protection  steel  can  be  manufactured 
cheaper  here  than  abroad.  Altho,  in  this  case  the  country 
seems  to  have  benefited  by  protection,  it  may  be  inferred 
from  the  large  fortune  amassed  by  the  steel  corporation, 
that   more   protection   was   given  than  was   actually   needed. 


6  FREE  TRADE  AND 

In  any  case  a  distinction  must  be  made  between  protection 
for  industries  during  a  nation's  infancy  and  protection  as  a 
general  principle  for  all  industries.  It  requires  no  induce- 
ment on  the  part  of  the  government  to  divert  capital  into 
promising  fields  of  endeavor.  Capital  because  of  its  per- 
sonal interest  in  the  outcome  is  more  aggressive  than  the 
government  in  the  exploitation  of  new  ideas  and  promising 
industries. 

The  protectionist  in  making  his  exhibit  of  the  results 
accomplished  in  the  favored  industries  forgets  the  many 
promising  industries  that  this  favoritism  will  destroy. 

Authorities 

The  literature  on  free  trade  and  protection  is  so  vast, 
and  represents  so  many  interests  that  it  is  difficult  for  the 
student  to  make  much  headway  until  he  has  gotten  his  bear- 
ings. It  is  well  to  begin  with  the  articles  in  encyclopedias, 
followed  by  a  history  of  the  question  which  may  be  obtained 
by  following  the  general  literature  on  the  subject.  The  brief 
will  enable  the  student  to  get  a  bird's  eye  view  of  the  whole 
question.  A  thoro  knowledge  of  the  general  principles  of 
the  question  will  render  less  confusing  the  special  arguments 
on  either  side,  many  of  which  are  highly  prejudiced. 

Joy  E.  Morgan. 


GENERAL  DISCUSSION 

Principles  of  Political  Economy.  Volume  II.  pp.  487-8. 

John  Stuart  Mill. 

The  only  case  in  which,  on  mere  principles  of  political 
economy,  protecting  duties  can  be  defensible,  is  when  they 
are  imposed  temporarily  (especially  in  a  young  and  rising 
nation)  in  hopes  of  naturalizing  a  foreign  industry,  in  itself 
perfectly  suitable  to  the  circumstances  of  the  country.  The 
superiority  of  one  country  over  another  in  a  branch  of  pro- 
duction, often  arises  only  from  having  begun  it  sooner. 
There  may  be  no  inherent  advantage  on  one  part,  or  dis- 
advantage on  the  other,  but  only  a  present  superiority  of 
acquired  skill  and  experience.  A  country  which  has  this  skill 
and  experience  yet  to  acquire,  may  in  other  respects  be 
better  adapted  to  the  production  than  those  which  were 
earlier  in  the  field;  and,  besides,  it  is  a  just  remark,  that 
nothing  has  a  greater  tendency  to  promote  improvements  in 
any  branch  of  production,  than  its  trial  under  a  new  set  of 
conditions.  But  it  cannot  be  expected  that  individuals 
should,  at  their  own  risk,  or  rather  to  their  certain  loss,  in- 
troduce a  new  manufacture,  and  bear  the  burden  of  carrying 
it  on,  until  the  producers  have  been  educated  up  to  the  level 
of  those  with  whom  the  processes  are  traditional.  A  pro- 
tecting duty,  continued  for  a  reasonable  time,  will  some- 
times be  the  least  inconvenient  mode  in  which  the  nation  can 
tax  itself  for  the  support  of  such  an  experiment.  But  the 
protection  should  be  confined  to  cases  in  which  there  is  good 
ground  of  assurance  that  the  industry  which  it  fosters  will 
after  a  time  be  able  to  dispense  with  it;  nor  should  the 
domestic   producers  ever   be   allowed   to   expect   that   it  will 


8  FREE  TRADE  AND 

be   continued   to    them,    beyond    the    time    strictly   necessary 
for  a  fair  trial  of  what  they  are  capable  of  accomplishing. 

Outlook.  92:  264-5.  May  29,  1909. 

Definitions. 

The  lay  reader  will  be  better  able  to  understand  the  cur- 
rent discussions  concerning  the  tariff  if  he  realizes  that 
tariff  duties  are  framed  and  levied  for  different  purposes. 
Classifying  duties  according  to  their  purpose,  we  may  con- 
veniently arrange  them  in  four  classes. 

I.  Revenue  duty.  Its  object  is  to  raise  revenue.  It  is 
therefore  arranged  to  raise  the  largest  revenue  with  the  least 
cost  of  collection  and  the  least  inconvenience  to  the  com- 
munity. Consequently  it  is  usually  levied  on  a  small  num- 
ber of  articles,  and  on  luxuries  rather  than  necessities.  Thus, 
in  England,  where  tariff  is  for  revenue  only,  the  duties  are 
levied  chiefly  on  spirits  and  tobacco. 

II.  Protective  duty.  Its  object  is  to  protect  the  home 
product  from  foreign  competition.  It  is  therefore  not  levied 
on  a  small  number  of  objects,  nor  necessarily  on  luxuries 
rather  than  on  necessities.  In  framing  a  protective  duty, 
theoretically  the  statesman  considers  what  domestic  indus- 
tries it  is  for  the  benefit  of  his  country  to  promote,  and  he 
arranges  the  duties  for  the  purpose  of  promoting  them. 
Thus,  a  duty  is  levied  on  foreign  silks  on  the  supposition  that 
if  by  the  imposition  of  a  tariff  the  price  of  foreign  silks  is 
increased,  American  silk  factories  will  be  built  and  American 
silks  manufactured.  The  object  is  not  to  raise  revenue,  but 
to  lessen  importation.  Sometimes  a  protective  duty  is  made 
so  high  as  to  prevent  importation  altogether.  In  this  case 
it  is  called  a  prohibitory  duty,  and  it  brings  in  no  revenue. 
It  is  for  this  reason  that,  not  infrequently,  lowering  the 
tariff  may  increase  the  revenue. 

III.  Bargaining  dut}'-.  That  is,  a  duty  levied  to  give  the 
home  government  an  advantage  in  tariff  bargaining  with 
foreign    governments.     For  this   purpose    Congress   has   pro- 


PROTECTIOX  9 

posed  to  make  some  duties  variable,  by  fixing  a  maximum 
above  which  they  cannot  be  raised  and  a  minimum  below 
which  they  cannot  be  lowered,  and  giving  to  the  Executive 
power  to  use  this  variation  in  dealing  with  other  countries. 
For  example:  Since  the  Spanish  War  Spain  has  put  a  duty 
on  Porto  Rican  coffee,  and  as  a  result  the  Porto  Rican 
coffee-planter  cannot  get  a  full  price  for  his  coffee  in  Spain, 
which  was  formerly  his  best  market.  America  has  a  duty 
on  olive  oil;  it  raises  a  little  revenue,  promotes  the  raising 
of  olive  oil  in  California,  and  has  developed  the  use  in 
America  of  a  cottonseed  oil  in  place  of  olive  oil.  Congress 
might  put  a  maximum  and  a  minimum  rate  on  olive  oil,  and 
the  President  might  propose  to  Spain  to  adopt  the  minimum 
rate  provided  Spain  would  correspondingly  reduce  her  tariff 
on  Porto  Rican  coffee.  The  result  would  be  that  the  Porto 
Rican  planters  would  get  back  their  coffee  market  in  Spain, 
the  American  housekeeper  would  get  a  pure  olive  oil  in  place 
of  the  cottonseed  oil,  and  the  California  production  of  olive 
oil  would  be  more  or  less  interfered  with.  This  is  what  we 
mean  by  a  bargaining  duty.  Sometimes  it  takes  the  form 
of  a  retaliatory  duty.  If,  for  example,  Germany  puts  a 
high  duty  on  American  food  products,  and  America  responds 
with  a  high  duty  on  German  toys  and  wines,  such  a  duty 
would  be  termed  retaliatory.  A  retaliatory  duty  never  ought 
to  be  resorted  to  unless  every  attempt  to  secure  fair  trade 
relations  by  amicable  negotiations  has  failed. 

IV.  Countervailing  duty.  The  term  countervailing  is  of- 
ten though  incorrectly  applied  to  bargaining  and  retaliatory 
duties.  Properly  speaking,  a  countervailing  duty  is  one 
which  neutralizes  the  effect  of  some  other  duty  elsewhere 
imposed.  For  example:  England  levies  an  excise  duty  on 
articles  made  in  England,  but  not  on  articles  made  in  the 
Isle  of  Man.  As  a  result,  the  manufacturer  in  the  Isle  of 
Man  would  have  a  trade  advantage  over  the  manufacturer 
of  the  same  goods  in  England.  To  countervail  or  counteract 
this  disadvantage,  England  levies  an  import  duty  on  goods 
brought  into  England  from  the  Isle  of  Man,  equal  to  the 
excise    duty    levied    on     goods     maniifactured    in     England. 


10  FREE  TRADE  AND 

Again:  An  import  duty  levied  by  the  United  States  on  wood- 
en goods  manufactured  in  Canada,  equal  to  an  export  duty 
imposed  by  Canada  on  unmanufactured  lumber  sent  into  the 
United  States,  would  be  a  countervailing  duty,  because  its 
object  would  be  to  countervail  or  counteract  the  export 
duty,  and  give, to  the  American  manufacturer  equal  advan- 
tages in  his  own  country  with  the  Canadian  manufacturer. 
In  Congressional  debates,  however,  the  term  "countervail- 
ing" has  been  applied  to  retaliatory  duties,  probably  from  an 
unconscious  desire  to  avoid  the  odium  which  would  attach  to 
duties  that  were  frankly  called  retaliatory. 

In  the  judgment  of  The  Outlook,  revenue  duties  and 
countervailing  duties,  as  defined  above,  are  legitimate;  bar- 
gaining duties  are  a  necessary  incident  to  a  protective  system, 
but  the  protective  system,  while  advantageous  in  the  early 
history  of  our  country  to  produce  a  diversified  industry  and 
consequent  economic  independence,  is  no  longer  necessary  to 
the  United  States,  and  the  moral  evils  it  involves  more  than 
counterbalance  any  industrial  advantages. 

Nineteenth   Century.  35:  343-52.  February,   1894. 

Prospects  of  Free  Trade  in  the  United  States. 

Chauncey  M.   Depew. 

British  statesmen  of  the  Colonial  period  determined  to 
confine  the  people  of  the  North  American  colonies  to  agri- 
cultural pursuits,  and  have  England  furnish  their  manufac- 
tures. This  was  one  of  the  causes  which  led  to  the  Revo- 
lutionary War  and  the  Independence  of  the  United  States. 
One  of  the  earliest  messages  of  George  Washington,  our 
first  President,  was  to  approve  a  report  of  the  Secretary  of 
the  Treasury,  Alexander  Hamilton,  embodying  a  scheme  for 
developing  the  resources  and  promoting  the  industries  of  the 
country  by  a  protective  tariff.  Hamilton  was  one  of  the 
most  original  and  creative  statesmen  of  any  age  or  of  any 
country.  His  report  has  formed  the  basis  of  all  legislation 
and  presented   the    gist    of   every   argument   on    the    subject 


PROTECTIOX  II 

from  that  day  to  this.  Upon  the  modification  but  never 
upon  the  abandonment  of  this  policy,  upon  the  details  of 
protection  but  never  upon  the  principles  of  free  trade,  every 
political  contest  was  fought  dow^n  to  our  Civil  War. 

The  requirements  for  revenue  in  that  tremendous  contest 
led  to  the  enactment  in  1861  of  a  higher  and  more  general 
tariff  than  ever,  w^hich  remained  in  force,  practically  un- 
changed, except  to  include  other  products,  until  the  McKinley 
Bill.  The  McKinley  legislation  was  really  a  codification  of 
the  many  laws  which  had  been  enacted  since  1861,  with 
such  alterations  as  changed  conditions  seemed  to  derrtand. 
It  released  wholly  or  in  part  articles  which  no  longer  needed 
protection,  and  took  from  the  free  list,  or  increased  the 
tariff  upon,  articles  hitherto  imported  which,  being  produced 
in  the  United  States,  would  furnish  employment  in  new 
industries  to  a  population  which  was  increasing  by  stimu- 
lated and  unusually  heav}'  immigration  too  rapidly  to  be 
readily  absorbed. 

The  measure  produced  unusual  excitement  and  alarm,  be- 
cause it  was  enacted  on  the  eve  of  a  general  election,  and 
when  a  large  and  comprehensive  reduction  of  duties  was 
expected.  Its  possible  evils  were  magnified  in  prophecy, 
and  there  was  no  time  for  demonstrating  its  results.  The 
country,  frightened  by  the  clamour,  rushed  madly  from  the 
imagined  danger  of  its  enforcement  to  the  real  perils  of  an 
industrial  revolution. 

The  first  election  of  Mr.  Cleveland,  in  1884,  meant  much 
but  accomplished  nothing.  He  was  a  sort  of  Prime  Minister 
with  a  hostile  parliament.  He  could  lecture  Congress,  but 
could  not  lead  it.  Mr.  Cleveland  is  a  phenomenon  in  poli- 
tics. When  he  came  to  the  Presidency,  he  had  never  visited 
Washington,  never  met  the  national  leaders,  and  never 
studied  nor  discussed  the  principles  of  his  party  or  of  the 
Opposition.  He  was  an  excellent  lawyer,  possessed  of  in- 
domitable industry,  honest  and  courageous.  He  applied  him- 
self earnestly  to  the  study  of  the  tariff  questions,  and  came 
out,  where  everyone  whose  knowledge  of  that  subject  is 
from  text-books  rather  than  experience  is  bound  to,  on  the 


12  FREE  TRADE  AND 

side  of  free  trade.  His  re-nomination  and  re-election  were 
admitted  on  all  sides.  That  sense  of  fairness  which  pre- 
eminently characterises  our  race  determined  that  he  ought 
to  have  a  trial  with  a  friendly  Congress.  But  with  the 
eagerness  of  his  new-found  faith,  and  carried  away  with 
enthusiasm  by  what  seemed  to  him  novel  but  impregnable 
principles,  he  disregarded  warning  and  entreaty  from  his 
advisers  and  promulgated  his  famous  Tariff  Reform  message. 
The  country  was  unprepared  for  the  drastic  changes  recom- 
mended, and  the  Republicans  came  again  into  power  with 
GeneVal  Harrison.  The  seed,  however,  sown  by  Mr.  Cleve- 
land bore  abundant  fruit.  It  gave  vitality  to  the  Democratic 
party,  and  placed  in  its  moss-covered  platform  a  new  and 
attractive  plank.  The  forces  of  opposition  to  existing  poli- 
cies, which  had  been  gathering  for  a  generation,  had  at  last 
found  a  leader  and  a  leading  idea. 

The  central  phalanx  of  the  Opposition  was  the  Southern 
States,  which  had  seceded  from  the  Union,  and,  after  their 
unsuccessful  revolt,  had  resumed  their  old  position  in  the 
'Republic.  Their  fear  of  the  political  power  of  their  emanci- 
pated and  citizenised  slaves  made  them  unquestioning  sup- 
porters of  the  Democratic  party,  no  matter  what  it  professed, 
or  promised,  or  did,  or  left  undone.  They  controlled  the 
party  machinery  within  their  states,  and  believed  that  while 
the  Republican  party  might  find  means  for  the  register  and 
record  of  the  negro  votes,  their  own  party  would  give  them 
moral  or  material  assistance  for  their  suppression.  The 
dread  of  the  possible  civic  and  social  results  of  the  blak-.k 
voters'  numerical  strength  overrides  with  an  otherwise  pat- 
riotic and  public-spirited  community  every  other  considera- 
tion. The  law  of  self-preservation,  they  claim,  is  higher 
than  either  the  common  or  statute  law. 

The  South  is  both  the  strength  and  weakness  of  the 
Democratic  party.  In  the  thirteen  southern  states  the  ver- 
dict is  so  well  known  before  election  that  the  leaders  need 
expend  neither  time  nor  money.  The  electoral  vote  of  these 
commonwealths  is  a  fixed  quantity  which  nothing  can  change. 
It  is  of  almost  incalculable  value  to  the  Democratic  party  in 


PROTECTION  13 

a  Presidential  contest  that  it  can  start  in  the  race  with  this 
advantage,  and  a  fearful  handicap  to  the  Republicans  that 
they  must  gain  by  hard  work  an  equal  position  before  the 
contest  is  fair  and  even.  But  free  discussion  and  public 
debate,  contending  parties  and  possible  victories  or  defeats, 
are  the  elements  of  political  education.  The  South  is  a  tun- 
nel through  which  the  clashing  principles  of  the  great  national 
organisations  are  carried,  to  fight  their  battles  in  the  North- 
ern and  Middle,  the  Western  and  the  Pacific  States.  Hence 
the  Southern  Democrats  become  wedded  to  opinions  at  vari- 
ance with  their  party.  They  are  inflexibly  loyal  at  the  polls 
to  put  Democratic  candidates  in  office,  and  assert  a  fiery 
independence  in  Congress  when  ordered  to  support  party 
measures.  They  failed  Mr.  Cleveland  almost  unanimously 
in  his  desperate  effort  to  repeal  the  law  authorising  the  pur- 
chase of  silver,  and  on  the  tariff  they  are  doubtful  or  hostile, 
because  they  find  the  interests  of  their  constituents  and  al- 
most the  existence  of  the  new  industries  of  their  states 
threatened  by  the  revenue  measures  of  the  Administration. 

The  numerically  small  but  very  influential  thinkers  and 
writers  of  the  free-trade  school,  through  the  magazines  and 
daily  newspapers,  from  the  lecture-room  of  the  college,  and 
the  public  platform,  by  pamphlet  and  leaflet,  pictured  the 
national  millennium  which  would  follow  the  overthrow  of 
protection.  The  opened  markets  of  the  world  were  to  de- 
mand the  surplus  products  of  our  factories  and  mills.  To 
supply  this  happy  drain  upon  our  resources,  capital  was  to 
find  fresh  and  more  profitable  fields,  and  labour  steadier 
employment  and  better  remuneration. 

In  many  of  the  states  large  masses,  and  in  some  of  them 
the  majority  of  the  voters,  had  been  captivated  by  the 
apostles  of  a  new  economic  gospel.  Its  fantastic  programme 
was  in  harmony  with  the  eccentricities  of  its  leading  advo- 
cates. They  calmly  relegated  to  the  rear  the  main  issues  of 
the  impending  battle,  and  especially  revenue  questions,  and 
followed  the  flag  of  governmental  paternalism.  They  pre- 
ferred silver  to  gold  as  a  basis  for  currency  because  there  is 
more  of  the  former.     They  would  abolish  the  national  banks. 


14  FREE  TRADE  AND 

and  at  every  railway  station  an  agent  of  the  Treasury  would 
loan  money  to  the  people  at  nominal  rates  of  interest  upon 
the  security  of  their  crops  and  flocks.  There  should  be  free 
coinage  of  silver,  which  was  to  be  legal  tender  for  all  dues, 
whether  to  the  government  or  between  citizens,  and  debts 
and  debtors  were  to  be  carried  to  the  financial  haven  of 
credit  and  prosperity  by  a  deluge  of  paper  money.  The 
Democratic  leaders  first  coquetted  and  then  formed  a  tem- 
porary alliance  with  these  people,  and  they  became  a  most 
valuable  auxiliary  to  the  army  assaulting  the  Republican 
entrenchments. 

Though  civil-service  reform  has  made  notable  and  most 
beneficial  progress  within  a  few  years  past,  the  spoils  sys- 
tem still  possesses  a  hundred  thousand  offices  which  are 
the  prizes  of  changing  Administrations,  and  the  rewards  of 
the  workers  of  the  successful  party.  For  every  appointee 
who  was  angry  because  his  own  estimate  of  his  merits  did 
not  materialise  into  a  better  place,  there  are  hundreds  who 
are  more  enraged  because  they  get  nothing.  Mr.  Blaine 
told  me  that  he  had,  as  Secretary  of  State  in  General  Harri- 
son's Cabinet,  a  hundred  and  fifty  vacancies  in  the  foreign 
service  to  fill,  and  that  he  was  compelled  to  select  from  four 
thousand  applicants.  Every  one  of  these  embryo  diplomats 
was  earnestly  supported  by  his  senator  and  member  of  Con- 
gress and  other  local  influences.  When  the  prizes  were  all 
distributed,  the  disappointed  office-seekers  went  home  on 
what  is  known  in  America  as  the  'swearing  train,'  and 
sharpened  their  knives  for  the  purpose  of  getting  even  at  the 
next  election  with  their  unappreciative  party. 

The  opposition  against  a  party  which  has  been  long  in 
power  gathers  in  that  always  considerable  and  constantly 
increasing  body  of  voters  who,  while  really  attached  to  the 
ruling  organisation  as  the  best,  still  feel  that  a  stinging  de- 
feat may  spur  it  to  take  up  the  pet  measure  of  temperance, 
or  labour,  or  social  legislation,  and  give  it  a  more  advanced 
position  in  the  legislative  programme.  These  were  the  in- 
congruous elements  which,  united  in  the  common  purpose  of 
bringing  about  a  change,  with  its  possibilities  of  being  any- 


PROTECTION  15 

body's  or  everybody's  victory,  flocked  to  Mr.  Cleveland's 
standard  of  tariff  for  revenue  only,  and  ultimately  free  trade. 

The  Republican  party  and  its  policy  had  been  in  power 
thirty-two  years.  It  had  come  into  existence  upon  the 
might}^  moral  issues  growing  out  of  the  continuance  or  ex- 
tension of  the  slave-owning  system.  It  had  stood  solidly 
for  the  preservation  of  the  national  union  during  the  Civil 
War,  and  had  successfully  worked  out  the  difficult  problems 
of  the  emancipation  of  the  slaves,  the  reconstruction  of  the 
Union,  the  resumption  of  specie  payments,  the  restoration  of 
the  credit  of  the  Republic,  and  the  funding  of  the  enormous 
debt  incurred  in  crushing  the  rebellion.  We  owed  about 
fifty  millions  of  dollars  at  the  beginning,  and  over  four 
thousand  millions  at  the  close  of  the  struggle.  The  party 
was  not  only  committed  to  the  policy  of  a  tariff,  primarily 
for  protection,  and  secondarily  for  revenue,  but  protection 
was  the  first  article  of  its  creed.  The  gigantic  strides  which 
the  country  has  made  during  the  quarter  of  a  century  fol- 
lowing the  War,  in  population  and  wealth,  in  the  develop- 
ment of  the  western  wilderness,  in  founding  states  and 
building  cities,  in  opening  mines  and  the  enlargement  of 
agricultural  area,  in  the  advance  in  the  wages  of  the  artisan 
and  decrease  in  the  cost  of  living,  and  particularly  in  expand- 
ing the  output  of  manufactured  products  from  about  a  thou- 
sand million  of  dollars  a  year  in  1865  to  over  seven  thousand 
million  in  1890,  were  claimed  and  believed  to  be  the  fruits 
of  the  protection  of  American  industries.  The  Republican 
party  had  not  been  infallible,  nor  free  from  the  mistakes  of 
parties.  It  relied  too  much  upon  its  past,  after  a  generation 
had  come  upon  the  stage  who  could  neither  be  moved  by 
eloquent  presentations  of  the  horrors  or  the  victories  of  the 
Civil  War,  nor  won  by  a  recital  of  the  glorious  achievements 
of  the  party. 

Political  history  does  well  enough,  as  a  picture,  to  point 
at,  but  the  political  coach  requires  the  latest  improvements 
in  motive  power,  or  it  comes  to  a  standstill.  Continued 
successes,  and  unequalled  wisdom  and  patriotism  in  great 
crises  had  toned  down  the  radicalism  and  stift'ened  the  con- 


i6  ■  FREE  TRADE  AND 

servatism  of  the  Republican  party.  Either  its  old  and  mar- 
vellous faculty  of.  elasticity  and  adaptability  was  impaired,  or 
its  leaders  saw  no  reason  for  its  use.  Without  the  sacrifice 
of  principle,  it  might  have  prepared  for  the  coming  storm. 
But  it  stood  stubbornly  by  the  chart  and  compass,  the  ma- 
chinery and  steering-gear  of  the  past,  and  met  disaster  with 
a  courage  which  mitigated  the  criticisms  upon  its  discretion. 
The  thirty  years'  war  ended  in  the  total  rout  at  the  polls  of 
the  party  which  had  won  so  many  decisive  victories  and 
made  for  the  Republic  the  most  eventful  and  progressive 
period  of  its  history. 

Silver  contributed  nothing  to  this  result,  though  it  was 
an  important  factor-  in  the  business  crisis  which  followed. 
In  several  of  the  newer  states  the  mining  of  silver  was  the 
principal  industry.  No  party  could  hope  for  its  electoral 
votes  in  a  Presidential  election  which  was  not  favourable  to 
the  monetising  of  this  metal  in  some  form.  There  has  been 
for  many  years  a  growing  belief,  particularly  in  the  agri- 
cultural states,  that  a  single  gold  standard  favoured  the 
creditor  as  against  the  debtor.  The  'Gold  Bug'  of  Wall 
Street  was  a  bugaboo  whose  baneful  power  not  only  alarmed 
communities  which  needed  money  and  had  little  security  of 
commercial  or  bankable  value  to  offer  for  it,  but  it  sent 
shivers  of  fright  through  the  grave  and  dignified  Senate  at 
Washington.  A  large  majority  of  our  people  had  always 
been  favourable  to  the  double  standard,  and  are  still  anxious 
for  and  hopeful  of  such  international  argreements  as  will  make 
it  possible.  The  Bland  Bill  of  1878,  providing  for  a  limited 
monthly  coinage  of  silver  at  the  old  ratio,  not  accomplishing 
all  that  was  desired  by  the  silver  advocates,  our  legislation 
was  rushing  us  headlong  to  free  coinage  and  a  debased  cur- 
rency, when  the  Sherman  suggestion  of  the  purchase  at 
the  market  price  of  4,500,000  ounces  of  silver  a  month  to  be 
represented  by  the  issue  of  silver  certificates,  and  to  that 
extent  increase  the  currency,  was  accepted  by  all  par.ties  as 
a  tentative  compromise.  The  operations  of  the  Bill  had  ac- 
cumulated in  the  Treasury  vaults  about  160,000,000  dollars' 
worth   of   silver   at   the    time    of   the   recent   panic.     Neither 


PROTECTION  17 

this  sum  nor  what  might  be  added  for  several  years  to  come 
by  the  operation  of  the  law  would,  under  normal  conditions, 
have  material!)'  affected  the  value  or  credit  of  our  currency, 
which  amounted  to  about  1,700,000,000  dollars. 

The  conditions,  however,  were  abnormal.  The  Presiden- 
tial election  of  1892  was  a  surprise.  Everybody  thought  Mr. 
Cleveland  might  go  in,  but  very  few  believed  that  both  the 
Senate  and  House  of  Representatives  would  also  be  carried 
by  his  friends.  The  country  was  paralysed  by  the  plunge  it 
had  deliberatel)^  taken.  Every  industrial  and  business  in- 
terest in  the  land  was  inextricably  interwoven  with  and  inter- 
dependent upon  the  protective  system.  A  party  had  come 
into  possession  of  the  Government  pledged  to  the  uprooting 
of  that  system.  It  had  declared  in  its  platform  that  the 
principle  of  protection  was  condemned  by  the  Constitution, 
and  that  its  practice  was  robbery  and  fraud.  Not  only  was 
its  platform  the  most  daring  and  explicit  utterance  ever 
given  by  an  American  party  or  an  American  statesman  for 
free  trade,  modified  only  by  the  necessities  of  the  revenue, 
but  the  letters  of  acceptance  of  its  candidates,  the  speeches 
of  its  orators,  and  the  editorials  of  its  press  promised  an 
immediate  and  thorough  revision  of  the  law,  and  the  exci- 
sion of  every  one  of  its  protective  features.  Bonfires  burned 
on  the  hilltops,  and  triumphal  processions  marched  through 
the  valleys,  to  celebrate  the  emancipation  of  the  people  from 
the  tyranny  of  the  tariff  robber-barons  and  the  inauguration 
of  an  era  of  cheaper  goods. 

What  will  you  do  with  your  victory?  was  the  question 
eagerly  asked  from  every  mill  and  mine,  from  every  factory 
and  furnace,  from  every  counting-room  and  banker's  office, 
from  every  corporation  and  working-man.  The  answer  was 
fiat  and  frank.  'We  will  do  what  we  promised  if  elected, 
and  what  you  have  specially  commissioned  and  instructed 
us  to  carry  out.'  There  never  was  so  direct  a  mandate 
from  a  constituency  to  an  Administration,  nor  an  Adminis- 
•tration  which  knew  so  well  what  was  expected  of  it  and 
what  it  intended  to  accomplish. 

The    business    of    the    countrj-    at    once    began    to    adjust 


i8  FREE  TRADE  AND 

itself  to  the  proposed  change.  It  was  in  an  unusually  con- 
servative and  healthy  condition.  Credits  had  contracted 
within  narrow  limits.  There  were  no  great  institutions  or 
enterprises  in  danger  to  precipitate  trouble  by  their  fall. 
But  a  panic  is  as  unreasoning  in  the  commercial  world  as  on 
a  field  of  battle.  When  the  cry  rings  out  "Let  every  man 
save  himself  who  can,"  all  is  lost.  Mr.  Cleveland  was  elected 
in  November,  1892,  and  inaugurated  in  March,  1893,  and  the 
newly  elected  Congress  was  to  meet  in  December.  The  be- 
lief became  general  that  at  its  first  session  the  body  politic 
would  be  strapped  on  the  operating-table,  and  merciless  but 
untrained  and  unpracticed  surgeons  would  explore  with  a 
knife  its  heart  and  brain,  its  liver  and  lungs,  its  kidneys  and 
stomach,  and  its  muscles  and  nerves,  for  protection  parasites. 
It  is  customary  for  the  mills  and  factories  to  lay  up  lajrge 
stocks  of  raw  material  and  gather  equally  large  stocks  of 
manufactured  goods  for  the  approaching  season,  and  for 
their  factors  and  commission  houses  to  receive  and  carry  the 
latter  until  they  are  absorbed  by  the  usual  demands  of  the 
markets.  The  banks  practically  assume  the  whole  burden  by 
loans  upon  commercial  paper.  The  fear  of  losses -if  the 
tariff  was  removed  from  articles  which  were  enjoying  a  pro- 
tection of  from  five  to  twenty-five  per  cent  paralyzed  this 
whole  process.  The  market  and  the  mill  alike  stood  still. 
The  banks  became  alarmed  and  refused  to  grant  the  ordi- 
nary accommodations  to  their  customers,  and  depositors  in 
fright  withdrew  their  deposits  in  currency  or  coin,  and 
locked  them  up  in  their  own  vaults. 

The  familiar  principle  that  a  chain  is  no  stronger  than  its 
weakest  link  had  a  rude  illustration  soon  after  Mr.  Cleve- 
land's inauguration.  The  weak  link  was  silver,  though  its 
possible  danger  was  far  in  the  future.  Imagination  takes  the 
seat  of  judgment  at  such  times,  and  in  the  popular  mind  the 
Government  was  on  the  eve  of  meeting  its  obligations,  the 
debtor  his  dues,  and  the  labourer  of  receiving  his  wages,  in 
silver  worth  only  sixty-eight  cents  on  the  dollar.  The  result 
can  hardly  be  conceived  by  those  who  were  not  in  the  midst 
of  the  revolution.     Exchange;.s  ceased  to  exist,  and  the  elabo- 


PROTECTION  19 

rate  machinery  of  credits  devised  in  the  middle  ages,  and 
infinitely  improved  and  enlarged  since,  went  to  pieces.  The 
internal  commerce  of  the  United  States  over  its  rivers  and 
canals,  its  great  lakes  and  one  hundred  and  seventy  thousand 
miles  of  railroads,  is  twrenty  times  larger  than  its  foreign 
trade.  Ninety-five  per  cent,  of  it  is  done  by  bills  of  ex- 
change of  various  kinds,  and  five  per  cent,  with  currency. 
At  least  eight}-  per  cent,  of  the  mills,  factories,  and  furnaces 
locked  their  doors,  and  two  millions  of  people  were  thrown 
out  of  employment.  Collections  between  New  York  and 
Philadelphia,  only  ninety  miles  apart,  were  made  through 
express  companies  and  by  messengers  with  carpet  bags. 
The  demand  for  the  repeal  of  the  Silver  Purchase  Law  be- 
came so  loud  and  threatening  that  the  President  was  com- 
pelled to  call  Congress  in  extra  session.  Then  occurred  one 
of  the  most  extraordinary  spectacles  in  the  history  of  parties. 
One  half  of  the  President's  followers  refused  to  follow  his 
lead,  and  it  required  every  resource  known  to  power  and 
authoriti"  to  hold  those  who  professed  obedience  to  their 
elected  chief.  The  wild  horses  of  Mr.  Gladstone  obey  every 
suggestion  of  the  bit  with  the  reins  in  the  hand  of  that 
veteran  able  and  accomplished  whip;  but  the  wild  horses  of 
Mr.  Cleveland  plunged  and  bolted  at  the  start,  nearly  up- 
setting the  national  coach.  If  I  may  continue  the  figure, 
which  was  suggested  by  General  Harrison,  it  was  only  by 
emptying  the  stalls  of  the  Republican  stables  and  putting 
their  occupants  in  the  traces  that  the  first  measure  of  the 
Administration,  and  one  vital  to  its  prestige  and  to  the 
solvency  and  prosperity  of  the  country,  was  pulled  through 
at  all. 

Contrary  to  expectations,  an  immediate  and  full  restora- 
tion of  business  and  employment  did  not  follow  this  anxious- 
ly desired  repeal.  A  large  proportion  of  industries  resumed 
work,  but  it  was  either  on  half-time  or  with  proportionate 
reduction  in  force,  and  wages  were  scaled  down  from  ten  to 
twenty  per  cent.  It  soon  became  apparent  to  the  dullest  in- 
tellect that  no  sane  man  or  sensibly  managed  corporation 
would  do  more  than  meet  the  demands  from  day  to  day  until 


20  FREE  TRADE  AND 

it  was  known  what  the  tariff  legislation  was  to  be.  No  one 
dared  accumulate  stocks  of  goods  and  have  their  value  so 
reduced  by  Congress  as  to  be  sold  at  a  loss.  While  busi- 
ness was  waiting  on  politics,  the  elections  came  off  in  No- 
vember in  thirteen  of  the  forty-four  commonwealths  of  the 
Union  for  members  of  the  legislature  and  state  ofificers. 
The  constituencies  were  the  same  in  part  which  had  elected 
President  Cleveland  and  the  present  Congress.  Though  they 
voted  at  these  elections  only  for  the  local  officers  of  their  sev- 
eral states,  the  battle  was  fought  on  national  issues,  and  upon 
the  same  lines  as  in  the  Presidential  canvass  the  year  before, 
in  every  state  except  New  York.  There  the  contest  was  com- 
plicated by  local  questions.  The  results  were  astounding. 
The  educational  campaign  for  free  trade,  which,  after  thirty 
years  of  earnest  and  ceaseless  labour,  had  finally  triumphed, 
was  in  less  than  twelve  months  turned  into  a  disastrous 
rout.  The  people  did  not  simpl}^  say,  they  shouted  to  the 
theorists  and  reformers,  "If  the  distant  blast  from  your  fur- 
nace dries  up  our  resources,  we  will  not  be  purified  by  its 
fire."  The  state  of  Iowa,  which,  though  formerly  Republican, 
had  become  a  Democratic  state,  gave  an  anti-Administration 
majority  of  twenty  thousand;  the  state  of  Massachusetts  did' 
the  same,  and  the  state  of  Pennsylvania  increased  its  Repub- 
lican majorities  of  the  Presidential  Election  from  fiftj^  to  one 
hundred  and  twenty-five  thousand. 

But  the  state  of  Ohio  was  the  accepted  battle-ground. 
This  commonwealth  fairly  represents  our  general  American 
conditions.  It  is  about  third  in  rank  in  its  output  of  wool, 
about  the  same  in  agriculture,  and  about  fifth  in  manufac- 
tures, among  the  states.  Its  industries  are  varied,  and  in 
iron  and  coal,  in  wood  and  glass,  in  textile  fabrics  and  other 
articles,  cover  nearly  the  whole  range  of  American  produc- 
tion. Mr.  Cleveland  had  come  within  a  few  hundred  of 
carrying  Ohio  in  1892,  and  succeeded  in  electing  one  of  his 
electors.  Mr.  McKinley  was  a  Republican  nominee  for  Gov- 
ernor in  1893,  and  not  only  advocated  protection,  but  said, 
T  am  Protection.'  'Mr.  O'Xeal,  his  Democratic  opponent, 
was   the   author   of  the   free   trade   or   revenue   plank   in   the 


PROTECTION  21 

national  Democratic  platform,  and  the  best  possible  repre- 
sentative of  that  idea.  The  contest  ended  in  the  election 
of  McKinley  by  eighty  thousand  majority,  and  two-thirds  of 
the  Legislature  were  Republicans.  The  constituencies  of 
one  half  of  the  Democratic  members  of  Congress  had  re- 
versed the  figures  which  the  year  before  had  given  him 
their  seats.  The  results  of  these  elections  fell  like  a  dyna- 
mite bomb  in  the  midst  of  the  Democratic  Congressional 
Committee,  which  was  busily  at  work  preparing  the  Ad- 
ministration Tariff  Bill.  They  are  still  engaged  in  a  des- 
perate effort  to  pull  together  themselves  and  their  measures. 
The  President,  while  reaffirming  his  views,  hastened  to 
reassure  the  country  in  his  recent  message  to  Congress  that 
any  legislation  would  have  due  regard  to  existing  business 
interests  and  the  wages  of  labour,  and  the  Committee  threw 
its  doors  wide  open  for  those  who  wished  to  be  heard  in 
defence  of  their  protective  duties.  The  Government  said  in 
effect,  'We  are  opposed  on  principle  to  the  worship  of  Diana, 
but,  out  of  regard  for  the  business  and  employment  of  our 
people  and  the  prosperity  of  our  city,  we  will  do  nothing 
which  can  injure  the  trade  of  the  silversmiths  of  Ephesus." 
The  reformers  abandoned  their  free-trade  principles,  and 
have  since  been  discussing  the  details  of  protection.  The 
high  debate,  whose  teachings  were  one  year  ago  so  em- 
phatically approved  by  the  people,  has  fallen  into  the  slums 
of  compromise  and  bargain  upon  the  duties  which  shall  be 
increased  or  lowered  upon  each  article  in  controversy.  Free 
trade  is  a  myth,  and  tariff,  for  revenue  only,  a  shadow. 
Most  of  our  industries  are  stagnant,  and  the  majority  of  our 
mills,  factories,  and  furnaces  in  total  or  partial  paralysis, 
while  the  victors  are  experimenting  with  the  weapons  of 
their  protectionist  enemies.  This  singular  mixture  of  high 
protection  for  interests  too  powerful  to  be  attacked,  and  low 
duties  or  none  for  weaker  ones,  would  be  laughable  if  the 
consequences  were  not  so  serious,  resulting  in  idle  capital 
and  unemploj^ed  labour,  in  diminished  incomes  and  unprece- 
dented bankruptcies.  Their  Bill,  now  and  before  it  has  be- 
come still  more  absurd  in  the  crucible  of  Senate  and  House 


22  FREE  TRADE  AND 

discussions  and  amendments,  is  both  a  protecting  and  a 
revenue  measure.  It  disturbs  business  without  changing 
either  the  policy  or  principles  of  the  past. 

A  tarifif  framed  to  protect  certain  products  or  manufac- 
tures, as  well  as  to  secure  revenue,  is  either  within  the 
powers  delegated  by  the  Constitution,  or  it  is  not.  It  is 
either  right  in  theory  and  practice,  or  the  reverse. 

The  Democratic  party  came  into  power  declaring  it  to  be 
unconstitutional  and  its  enactment  and  enforcement  robbery. 
Any  departure  from  this  position  involves  them  in  inextric- 
able difficulties.  The  Democratic  states  of  Virginia,  West 
Virginia,  Maryland,  and  Tennessee  say,  'Free  coal  from 
Canada  bankrupts  us,  therefore  we  must  be  excepted.'  The 
Democratic  state  of  South  Carolina  says  the  same  of  rice 
from  India;  Louisiana  of  sugar  from  the  West  Indies;  and 
Alabama  and  Missouri,  of  iron-ore  from  Cuba.  Then  the 
individual  Democratic  Congressman,  whose  district  by  its 
votes  in  the  recent  election  has  warned  him  that  if  the  par- 
ticular industry  upon  which  that  neighbourhood  depends  for 
its  prosperity  is  disturbed  he  is  doomed  to  defeat,  demands 
that  the  exceptions  be  broadened  sufficiently  to  shelter  him. 
If,  under  these  conditions,  the  much-heralded  measure  which 
was  to  repeal  the  alleged  atrocities  of  the  McKinley  Bill 
and  curb  the  reputed  rapacity  of  the  tarifif  robber-baron  ever 
reaches  President  Cleveland  for  his  signature,  he  will  not 
recognize  it.  It  will  belong  to  that  kind  of  legislative  leger- 
demain where  the  ambitious  politician  is  willing  to  sacrifice 
every  section  of  his  law  if  his  name  remains  on  the  cover. 

The  tarifif  reformers,  therefore,  find  themselves  in  a 
position  where  it  is  equally  hazardous  to  advance  or  retreat. 
They  must  do  something,  or  confess  either  the  falsity  of 
their  promises  or  the  fallacy  of  their  teachings.  Such  a 
radical  reform  as  was  originally  intended  they  cannot  carry 
through,  and  anything  less  is  simply  an  affirmation  of  the 
Republican  policy.  In  the  meantime,  the  people,  harassed 
with  doubts  and  fears,  losing  money,  or  out  of  employment, 
with  the  impatience  of  despair  or  of  hunger,  are  clamouring 
for   action.     Every    day's    delay    is    regarded    as   further   evi- 


PROTECTION  23 

dence  of  incapacity  for  government.  Under  these  circum- 
stances, a  miracle  can  scarcely  pass  a  measure  which  would 
materially  alter  the  present  law,  and  only  a  miracle  can  pre- 
vent the  return  of  the  Protectionists  to  power. 

Century  Magazine.  77:  196-205.  December,  1908. 

My  Experience  With,  and  Views  Upon,  the  Tariff. 
Andrew  Carnegie. 

Many  changes  have  occurred,  and  hence  many  changes 
can  be  judiciously  made  in  the  tariff.  There  is  no  doubt 
about  this;  but,  on  the  other  hand,  I  have  been  led  to  the 
conclusion  that  conditions  have  changed  so  greatly  in  the 
interval  that  the  tariff  should  now  be  viewed  from  a  new 
standpoint. 

The  writer  assumes  that  a  decided  majority  of  our  voters 
are  agreed — 

First:  That  it  is  advisable  for  new  countries  to  encourage 
capital  by  protective  duties,  when  seen  to  be  necessary  to 
develop  new  industries. 

Second:  That  after  full  and  exhaustive  trials,  if  success 
be  not  finally  attained,  such  protection  should  cease,  except 
as  noted  hereunder. 

Third:  That  should  the  experiment  succeed,  protection 
becomes  unnecessary,  and  should  steadily  but  gradually  be 
abolished,  provided  that  the  home  supply  of  any  article 
absolutely  necessary  for  the  national  safety  shall  not  thereby 
be  endangered. 

So  much  for  the  doctrine  of  protection.  That  there  is  a 
cult  who  regard  that  doctrine  as  sacroscant  and  everlasting, 
none  knows  better  than  the  writer;  but  its  members  are  few 
and  not  likely  to  increase,  since  our  country  has  admittedly 
developed  and  gained,  and  is  to  continue  gaining,  manufac- 
turing supremacy  in  one  department  after  another  until  it 
reaches  a  position  where  free  trade  in  manufactures  would 
be  desirable  for  it,  all  the  markets  of  the  world  open  to  her, 


24  FREE  TRADE  AND 

and  hers  to  the  world.  Our  difficulty  will  then  be  to  get 
other  nations  to  agree  to  free  trade. 

There  will  remain  importations  of  foreign  luxuries,  which 
should  be  still  heavily  taxed  for  revenue,  not  protection; 
the  aim  being  to  levy  the  tax  that  would  produce  the  great- 
est revenue  from  luxuries.  This  would  not  seriously  affect 
the  producer  since  the  buyer  pays  all  duties,  and  demand 
would  not  be  greatly  affected  by  the  higher  price  since  only 
the  rich  use  them. 

We  have  already  become  by  far  the  greatest  of  all  man- 
ufacturing nations.  Our  "infant  industries"  of  the  past  have 
reached  maturity,  and,  speaking  generally,  are  now  quite 
able  to  protect  themselves.  The  puling  infant  in  the  nurse's 
arms  that  Congress  in  1871  nursed  so  tenderly  will  appear 
next  year  before  its  guardian  as  the  stalwart  champion  who 
has  conquered  competitors  in  many  fields,  thus  proving  him- 
self worthy  of  the  protection  bestowed  upon  him  in  his 
youth,  and  fully  vindicating  the  protective  policy  pursued. 

While  the  tariff  as  a  whole  even  to-day  has  ceased  to  be 
primarily  beneficial  as  a  measure  of  protection,  it  has  be- 
come of  vast  importance  from  the  standpoint  of  revenue,  and 
it  is  to  this  feature  I  bespeak  the  special  attention  of  readers 
of  all  parties,  for  duties  upon  imports,  not  for  protection, 
but  for  needed  revenue,  should  not  become  a  party  question. 
Reasonable  men  of  all  parties  may  be  expected  to  approve 
this  plan  of  obtaining  revenue. 

That  the  huge  industrial  combinations  of  our  time  tend  to 
enlarge  the  unfair  inequalities  which  existed  even  before 
their  day  in  the  distribution  of  wealth  will  not  be  questioned; 
that  it  is  desirable  that  the  contrast  between  the  new  cult  of 
multimillionaires  and  the  laborers  should  be  lessened  by 
every  available  means  will  also  be  generally  accepted.  The 
tariff  is  to-day  a  potent  engine  for  this  purpose,  and  it  can 
be  made  even  more  so. 

The  following  should  be  carefully  considered  by  intelli- 
gent men  of  all  parties.  The  amount  of  revenue  from  our 
imports  in  1906  was  $292,000,000;  the  last  fiscal  year  (1907)  it 


PROTECTION  25 

increased  fourteen  per  cent  to  $332,000,000,  exactly  one  half 
of  the  total  national  revenue,  $663,000,000. 

Among  the  duties  collected  in   1906  (the  details  for  1907 
have  not  yet  been  published)  were  the  followfing: 

1906 

Duties  collected  upon  Amounts 

Cotton  manufactures    $33, 349-000 

Leather   manufactures    5,073,000 

Silk  manufactures    17,351,000 

Wood   manufactures    4,143,000 

Wool  manufactures  6,700,000 

Stone  and  china  w^are 7,542,000 

Fibres   18,900,000 

Fruits   and   nuts 6,550,000 

Glass     3,837,000 

Furs    1,780,000 

Jew^elry    3,523,000 

Malt  liquors   1,507,000 

Spirits  distilled   6,555,000 

Oils    1 ,622,000 

Wines   5,464,000 

Toys,    dolls,    etc 2,065,000 

Tobacco     23,927,000 

Raw  wool,  camel  and  goat  hair,  alpaca, 

etc 39,068,000 


$188,956,000 


adding  fourteen  per  cent  increase  for  1907,  a  total  of,  say, 
$216,000,000. 

Here  we  have  $216,000,000  out  of  a  total  of  $332,000,000 
collected  upon  luxuries  of  the  rich,  who  alone  use  foreign 
articles  to  any  extent. 

This  general  statement  may  and  probably  will  be  disputed 
by  agents  of  foreign  manufacturers,  claiming  that  the  poor 
do  use  several  of  the  articles  named  to  some  extent.  Some 
of  the  wool  imported,  for  instance,  may  go  into  inferior 
cloth  used  by  the  poor;  so  with  other  articles.     But  notwith- 


26  FREE  TRADE  AND 

standing  all  that  can  justly  be  urged  of  this  nature,  the  in- 
disputable fact  will  remain  that  with  trifling,  if  any,  excep- 
tions, these  imported  articles  are  used  almost  exclusively  by 
the  rich  or  well-to-do. 

Two  articles  of  domestic  production  yielded  all  except 
two  million  dollars  of  the  internal  taxes,  which  were,  in  1907, 
$269,000,000 : 

Liquors  (wines,  whisky,  and  beer)  ..  .$215,000,000 
Tobacco     52,000,000 


$267,000,000 


The  workman  who  neither  drinks  nor  smokes  is  thus 
virtually  free  from  national  taxation  either  through  tariff  or 
internal  revenue,  except  upon  sugar,  which  is  the  only  im- 
ported taxed  article  of  general  consumption  by  rich  and  poor 
alike.  In  1906,  this  tax  yielded  $52,500,000.  It  is  protec- 
tive, with  a  view  to  securing  a  home  supply  from  the  beet- 
root, and  the  Secretary  of  Agriculture  recently  informed  the 
writer  that  he  hopes  to  succeed.  Last  year  we  manufactured 
five  hundred  thousand  tons,  one  fifth  of  our  consumption, 
and  the  growth  of  beets  is  increasing  /early.  A  few  years 
should  determine  the  success  or  failure  of  this  experiment. 

The  difference  between  the  United  States  on  the  one 
hand  and  France  and  Germany  on  the  other  is  that  the 
former  supplies  its  own  food  products  and  taxes  chiefly  im- 
ported luxuries  used  by  the  rich  (sugar  excepted),  while  the 
latter  must  import  food  products  which  are  consumed  by 
both  rich  and  poor;  hence,  in  France  and  Germany  tariff 
duties  imposed  upon  food  to  protect  their  own  agriculturists 
reach  the  masses  and  must  be  paid  by  them.  For  instance, 
in  1905,  Germany  imported  articles  for  consumption  valued 
at  no  less  than  $512,000,000.  In  1905,  France  imported  food 
products  valued  at  $156,000,000. 


PROTECTION  27 

In  1905  customs  duties  yielded $89,000,000 

Internal  taxes,  sugar 28,000,000 

Internal  taxes,  tobacco  monopoly 90,000.000 

Internal   taxes,   matches 10,000,000 


$217,000,000 


All  classes  consumed  these  articles;  hence,  the  duties  upon 
them  tax  the  poor. 

Britain  does  not  levy  duties  upon  imported  grain  prod- 
ucts, but  taxes  other  articles  as  follows: 

In  1906. 

Tobacco  $65,000,000 

Tea    34,000,000 

Sugar    31,000,000 

Coffee,  cocoa,  etc 3,500,000 

Excise    (internal)    taxes    upon    whisky 

and  beer   147,000,000 

Total  $280,500,000 

These  articles  are  consumed  by  rich  and  poor;  but  what  we 
have  said  in  regard  to  our  tariff  applies  in  great  part  to  the 
British — those  who  neither  smoke  nor  drink  pay  little  taxa- 
tion. The  tax  upon  sugar  has  been  reduced  one  half  this 
year,  and  Britain  does  well  to  tax  liquor  heavily,  for  intem- 
perance is  her  greatest  evil;  it  would  be  better  if  the  excise 
taxes  were  increased,  the  tobacco  tax  is  already  very  high. 
So  also  with  America,  if  higher  taxes  can  be  collected  with- 
out leading  to  illicit  distillation.  It  is  believed  that  we  can 
now  safely  increase  the  tax  upon  domestic  liquors  and 
tobacco.  By  all  means  let  the  experiment  be  made,  for  these 
are  articles  hurtful  to  the  people. 

Thus  does  the  American  tariff,  in  happy  contrast  to  others, 
almost  exempt  the  poor  and  heavily  tax  the  rich,  just  as  it 
should;  for  it  is  they  who  have  the  ability  to  pay  as  required 
by  the  highest  economic  authority. 


28  FREE  TRADE  AND 

We  have  shown  a  revenue  of  $216,000,000  collected  yearly 
upon  the  luxuries  of  the  rich,  without  being  seriously  felt. 

The  excited  free  trader  is  often  found  declaiming  against 
these  heavy  duties,  and  others  of  the  same  class.  To  his 
appeals  Congress  should  turn  a  deaf  ear  and  rather  increase 
than  reduce  them,  not  as  a  protective,  but  as  a  revenue 
measure.  That  they  could  be  advanced  in  most  cases  with- 
out materially  reducing  consumption  is  highly  probable, 
since  the  rich  will  have  what  is  desirable  or  fashionable  re- 
gardless of  a  small  increase  in  cost.  The  experiment  should 
be  made  and  on  no  account  should  the  representative,  having 
the  interests  of  the  masses  at  heart,  agree  to  one  iota  of 
reduction  upon  any  of  these  or  other  luxuries,  for  in  no  other 
way  can  the  wealthy  classes  so  surely  be  made  to  pay  so 
great  a  sum  toward  the  support  of  the  Government. 

This  is  sound  and  fair  policy,  for  the  man  who  has  no 
more  income  than  sufficient  to  meet  the  physical  wants  of 
himself  and  those  dependent  upon  him  should  be  considered 
as  not  having  ability  to  pay  any  taxation  whatever,  just  as 
the  humble  homestead  is  exempt  from  sale  under  a  mortgage 
or  the  small  incomes  in  countries  laboring  under  that  bur- 
den. Adam  Smith's  dictum  is  in  these  memorable  words: 
"The  subjects  of  every  state  ought  to  contribute  toward  the 
support  of  the  Government,  as  nearly  as  possible,  in  propor- 
tion to  their  respective  abilities,  that  is,  in  proportion  to  the 
revenue  which  they  respectively  enjoy  under  the  protection 
of  the  state."  Every  legislator  should  bear  these  words  in 
mind.  This  is  the  feature  of  the  tariff  in  which  the  great 
mass  of  our  working  people  is  most  deeply  interested. 

Virtually,  as  we  have  seen,  the  working  classes  of  Ameri- 
ca who  neither  drink  nor  smoke  are  exempt  from  national 
taxation,  sugar  excepted.  So  are  the  British,  who,  however, 
are  still  taxed  upon  tea,  coffee,  and  chocolate.  They  are 
vastly  better  off  in  this  respect  than  the  German  working 
classes,  who,  in  addition,  have  a  tax  upon  imported  food, 
which  also  raises  the  prices  of  the  home-grown  food  supply. 

The  next  Congress  dealing  with  the  tariff  will  probably 
be  inclined  at  first  to  reduce  duties  all  round  and  perhaps  to 


PROTECTION  29 

abolish  some,  but  its  first  care  should  be  to  maintain  present 
duties,  and  even  in  some  cases  to  increase  them,  upon  all 
articles  used  almost  exclusively  by  the  rich,  and  this  not  for 
protection,  but  for  revenue,  not  drawn  from  the  workers  but 
from  the  rich.  That  is  the  first  and  prime  duty  of  Congress. 
We  should  not  forget  that  Government  expenditures  have 
increased  enormously  in  recent  years  and  that  additional 
revenue  is  required. 

Its  second  duty  is  to  reduce  duties  greatly  vipon  manu- 
factured articles  and  to  abolish  entirely  those  no  longer 
needed. 

The  writer  has  cooperated  in  making  several  reductions 
as  steel  manufacturers  become  able  to  bear  reductions.  To- 
day they  need  no  protection,  unless  perhaps  in  soine  new 
specialties  unknown  to  the  writer,  because  steel  is  now  pro- 
duced cheaper  here  than  anywhere  else,  notwithstanding  the 
higher  wages  paid  per  man.  Not  a  ton  of  steel  is  produced 
in  the  world  at  as  small  an  outlay  for  labor  as  in  our  own 
country.  Our  coke,  coal,  and  iron  ores  are  much  cheaper, 
because  more  easily  obtained  and  transported,  and  our  output 
per  man  is  so  much  greater,  owing  chiefly  to  the  large 
standardized  orders  obtainable  only  upon  our  continent;  the 
specialized  rolling  mills;  machinery  kept  weeks  upon  uni- 
form shapes  without  change  of  rolls,  and  several  other  ad- 
vantages. Britain  and  Germany  are  the  only  important 
steel  manufacturing  nations  other  than  ourselves.  I  am 
assured  by  one  who  has  recently  examined  the  matter  that 
he  found  even  in  Germany  to-day  that  the  cost  per  ton  for 
labor  was  greater  than  with  us,  unusually  high  as  our  wages 
are  at  present.  Were  there  free  trade  in  iron  and  steel  be- 
tween America  and  Europe,  a  few  orders  might  go  abroad 
at  times  when  American  mills  were  fully  occupied  and  high 
prices  prevailed,  and  this  would  be  advantageous  to  our 
country;  but  if  these  shipments  amounted  to  much,  prices 
would  rise  in  Europe,  and  prevent  further  exports  to  our 
market.  The  United  States  made  last  year  more  steel  (over 
23,000,000  tons)  than  Germany,  Britain,  France,  and  Belgium 
combined.     New   steel   works   are   under   construction  which 


30  I'REE  TRADE  AND 

will  produce  enough  to  enable  her  to  make  more  than  the 
whole  world  besides.  This  she  will  do  within  five  years, 
probably  within  three.  The  day  has  passed  when  any  for- 
eign country  can  seriously  affect  our  steel  manufactures, 
lariff  or  no  tariff.  The  Republic  has  become  the  home  of 
steel,  and  this  is  the  age  of  steel.  It  may  probably  be  found 
that  there  exists  the  small  manufacturer  of  some  specialty  in 
steel  which  still  needs  a  measure  of  protection.  The  writer 
hopes,  if  such  there  be,  the  committee  will  give  patient  at- 
tention to  such  cases.  It  is  better  to  err  on  the  side  of  giv- 
ing these  too  much,  rather  than  too  little,  support.  Every 
enterprise  of  this  kind  should  be  fostered.  The  writer 
speaks  only  of  the  ordinary  articles  and  forms  of  steel  as 
being  able  to  stand  without  protection.  He  hopes  there  are 
to-day  pioneers  in  several  lines  requiring  protection  which 
will  be  generously  given  temporarily.  The  committee  should 
welcome  such  special  cases. 

There  are  several  features  in  our  tariff  affecting  the 
masses  of  our  people  which  should  be  carefully  looked  into, 
since  they  subject  these  to  the  increased  cost  of  some  of  the 
necessaries  of  life.  I  notice  three  charges  often  made  against 
our  present  tariff. 

The  first  in  importance  relates  to  illuminating  oils.  It 
is  charged  that  Congress  refused  to  place  a  duty  upon  these; 
but  by  some  means  a  bill  was  passed  which  provided  that 
upon  oil  from  any  country  that  taxed  American  oils  a  cor- 
responding tax  would  be  collected  in  America  upon  oils  im- 
ported from  such  country.  Russia  then  taxed  American  oils, 
and  our  oil  producers  enjoy  protection  from  Russian  oils, 
and  the  ludicrous  spectacle  is  seen  of  each  country  protect- 
ing itself  from  importations  of  oil  from  the  other.  If  all 
this  be  true,  this  is  clearly  not  a  case  of  genuine  protection. 
It  gives  to  each  interest  a  monopoly  of  oil  in  its  own  coun- 
try. 

It  is  said,  but  how  truly  the  writer  does  not  know,  that 
although  the  Russian  and  American  companies  had  agreed 
between  themselves  not  to  invade  each  other's  country, 
nevertheless,  oils  found  their  way  in  through  sales  made  by 


PROTECTION  31 

these  companies  to  other  parties  and  that  existing  legisla- 
tion was  therefore  secured  by  the  oil  companies  in  Russia 
and  America.  It  is  such  and  other  kindred  charges  published 
throughout  the  country  that  make  the  tariff  the  object  of 
attack  as  a  vehicle  of  corruption.  No  duty  is  more  impera- 
tive upon  the  part  of  the  honest  upholders  of  the  principle 
of  protection  v^^hen  needed  than  to  purge  the  next  tariff  of 
every  trace  of  other  than  open  and  honest  legislation,  clearly 
intended  to  shield  the  masses  from  unfair  taxation  and  thus 
promote  national  prosperity.  The  oil-producers,  like  the 
steel-producers,  of  our  country,  need  no  protection  from  the 
products  of  other  lands,  and  the  retaliatory  act  should  be 
promptly  repealed. 

The  second  charge  often  presented  relates  to  the  thread 
industry.  The  leading  producers  in  Britain  and  America 
have  consolidated,  and  it  is  said  virtually  fixed  prices.  The 
present  duty  enables  the  home  producer  to  maintain  higher 
prices  here,  while  its  abolition  would  enable  the  continental 
manufacturers  to  export  their  product  to  America  in  com- 
petition with  the  consolidation,  which  has  now  a  monopoly, 
except  that  there  is  one  cotton-thread  producer  still  in  our 
country  ostensibly  outside  of  the  combination.  When  inter- 
national combinations  like  this  appear,  or  wheil  any  of  our 
manufacturers  enter  into  international  agreements,  it  may  be 
found  necessary  in  the  future  to  provide  that  the  Interstate 
Commission  should  have  control.  It  is  clear  there  must  be 
some  control  or-  the  consumer  will  be  seriously  affected. 
The  labor  in  the  mills  of  America  is  higher  paid,  and  thread 
actually  costs  more  per  spool,  I  am  told,  than  in  Scotland, 
differing  in  this  respect  from  steel  rails.  On  the  other  hand, 
home  manufactures  have  cheaper  cotton.  The  thread  com- 
bination needs  careful  scrutiny.  No  doubt  the  Congressional 
committee  will  give  this  due  attention  and  listen  to  the 
"other  side"  of  the  question,  for  there  are  always  two  sides. 

Foreign  cutlery  is  the  third  and  last  subject,  often  in 
evidence.  The  duties  upon  this  class  of  articles  are  com- 
plained of  as  being  far  too  high,  but  I  take  it  that  imported 
cutlery  is  used  exclusively  by  the  rich.     The  tarifif  committee 


32  FREE  TRADE  AND 

should  maintain  present  high  duties  upon  the  extra  fine  and 
costly  ware,  but  fix  much  lower  duties  upon  the  ordinary 
grades  used  by  the  masses,  just  as  the  present  tariff  admits 
sewing  and  darning-needles  free,  although  other  kinds  are 
taxed.  There  seems  no  reason,  however,  why  steel  for  cut- 
lery should  not  be  purchased  cheaper  in  our  country  than 
abroad,  nor  why  our  home  manufacturers  should  not  supply 
our  home  demands  for  cutlery. 

The  Republican  part}'  has  nursed  home  industries,  sup- 
ported, however,  as  we  have  seen,  by  an  element  in  the 
Democratic  party  which  we  sober  protectionists  may  be 
excused  for  considering  the  wiser  element  of  that  party. 
Hence  the  tariff  has  become  a  national,  not  a  party,  issue. 

That  the  value  of  our  manufactures  in  1905,  $16,866,706,985 
( £3,373,000,000),  exceeds  those  of  our  closest  competitor, 
Britain,  three  times  over,  and  that  our  exports  of  these  in 
1906  was  $686,000,000,  and  of  crude  materials  for  use  in 
manufacturing  $510,000,000,  is  ample  vindication  of  the  pro- 
tective policy  of  the  past. 

In  our  day  a  different  duty  devolves  upon  our  party  and 
its  Democratic  protectionist  allies.  The  infant  we  have 
nursed  approaches  the  day  when  it  should  be  weaned  from 
tariff  milk  and  fed  upon  the  stronger  food  of  free  competi- 
tion. It  needs  little,  if  any  more  nursing,  but  the  change 
should  not  be  made  abruptly.  It  is  better  to  err  upon  the 
safe  side,  if  we  err  at  all;  but  he  is  the  best  of  protectionists 
who  corrects  all  faults  as  they  are  revealed  and  positively 
declines  to  subject  the  nation  to  protection  in  any  branch 
where  it  is  not  clearly  needed,  affording  protection  always 
with  the  resolve  that  it  shall  be  temporary.  A  class  of 
excellent  citizens  has  arisen  who  really  see  in  the  tariff  one 
of  the  chief  causes  of  national  demoralization;  not  a  few 
consider  it  should  be  the  leading  issue  in  a  Presidential  cam- 
paign. The  writer  has  personal  friends  on  both  sides — those 
who  see  in  it  the  chief  source  of  political  evil,  and  those  who 
think  it  the  country's  salvation.  For  neither  view  is  there 
sound  foundation  to-day,  for  protection  is  no  longer  the 
vital  issue  it  was;  but  the  first  class  will  have  something  to 


PROTECTION  33 

rest  their  contentions  upon,  however,  if  there  be  continued 
upon  the  statute-books  duties  and  provisions  manifestly  out 
of  date.  All  such  and  everything  of  a  dubious  character  in 
our  tariff  legisl'ation,  our  party,  in  the  forthcoming  revision 
as  the  legitimate  protection  of  the  true  protective  policy, 
should  boldly  sweep  away. 

In  conclusion,  a  "tariff  for  protection,"  which  was  the 
issue  forty  years  ago,  should  now  give  place  to  a  '"tariff  for 
revenue,"  and  therefore  the  strict  maintenance  of  the  pres- 
ent duties  upon  foreign  luxuries  paid  by  the  rich.  The  pres- 
ent tariff  rightfully  exempts  the  masses  of  the  people  from 
almost  all  national  taxation,  because  they  have  not  '"the  abil- 
ity to  pay,"  as  required  by  Adam  Smith,  the  greatest  eco- 
nomic authority. 

The  writer,  having  often  been  classed  with  the  "robber 
tariff  barons,"  may  probably  be  proclaimed  as  a  convert  to 
new  views  since  he  retired  from  manufacturing,  but  his 
associates  know  better,  and  many  a  foreign  manufacturer 
could  tell  of  the  prophecy  with  which  he  has  so  often  startled 
them;  namely  that  in  a  short  time  America  w^ould  become 
the  leading  manufacturer  and  foremost  apostle  of  free  trade, 
while  their  own  countries  would  be  discussing  whether  or 
not  to  put  up  the  barriers.  Britain  to-day  is  seriously  con- 
sidering this  very  question. 

The  writer  has  not  changed  one  iota  since  he  first  formed 
a  clear  and  definite  view  in  regard  to  protection.  For  new 
countries  possessed  of  natural  but  undeveloped  resources  it  is 
the  only  policy  available,  hence  we  see  Canada,  Australia, 
and  New  Zealand  all  adopting  it,  even  against  their  mother- 
land, to  whom  they  are  indebted  for  protection  from  enemies, 
a  seemingly  most  ungrateful  return,  could  they  not  plead 
that  it  is  indispensable  for  the  development  of  their  own 
resources. 

The  question  assumes  another  form  when  old  and  fully 
developed  countries  like  Britain,  after  having  fully  tested 
their  capacity  to  produce  any  article  in  competition  with 
other  lands,  are  considering  whether  to  handicap  outside 
competition.     This    is    not    a    case    of    temporary    protection 


34  FREE  TRADE  AND 

through  duties  upon  competing  imports,  but  one  which  opens 
the  question  whether  it  is  economically  best  to  use  the  do- 
mestic product  even  at  greater  cost.  The  reply  seems  to 
be:  If  it  involve  the  loss  of  a  home  suppfy  of  an  article 
essential  for  the  national  safety,  yes;  if  not,  no.  This  is 
also  true  Adam  Smith  doctrine.  Each  case  must  be  judged 
on  its  merits  from  that  point  of  view. 

There  is  no  occasion  for  haste  or  for  any  revolutionary 
step  in  coming  tariff  legislation.  It  is  better  to  go  a  little 
too  slow  than  a  little  too  fast.  In  the  writer's  opinion,  the 
revision  of  the  tariff  could  to-day  safely  and  advantageously 
be  made  a  radical  one  upon  the  lines  suggested;  but  if  Con- 
gress, in  deference  to  the  timid  manufacturer,  "whom  we 
have  always  with  us,''  thinks  it  prudent  not  to  disturb  his 
dreams  unduly,  and  only  halves  present  duties  upon  some 
articles,  and  abolishes  them  entirely  upon  others — always 
provided  it  guards  zealously  the  present  duties  upon  the 
luxuries  of  the  rich  for  revenue, — the  writer  will  be  thankful 
and  philosophic  as  usual,  because  one  step  in  the  right  direc- 
tion will  have  been  taken  and  he  knows  the  final  step  must 
come  before  long,  the  sooner  the  better. 

Just  as  the  Republic  has  Tvon  supremacy  in  steel,  and  can 
to-day,  even  during  this  temporary  world-wide  depression, 
send  it  profitably  to  every  free  market  in  the  world  in  suc- 
cessful competition  with  all  other  manufacturers,  so  is  she 
to  win  Ijiis  proud  position  in  one  field  of  industry  after 
another,  her  enormous  standardized  home  market  being  one 
of  the  chief  elements  of  her  conquering  power.  Many 
foreign  luxuries  will  still  be  imported,  but  these  should 
yield  revenue  paid  by  the  rich  consumer. 

The  writer  is  confident  that  this  prophecy  will  soon  be 
fulfilled,  for  nothing  can  keep  the  Republic  from  speedily 
dwarfing  all  other  nations  industrially,  if  she  only  frowns 
upon  great  navies  and  increased  armies  and  continues  to  tread 
the  paths  of  peace,  following  the  truly  American  policy  of 
the  fathers. 


PROTECTIOX  35 

Protection  for  Protection. 

Joy  E.  Morgan. 

If  protection  is  admitted  as  a  desirable  commercial  policy, 
it  should  be  safeguarded  by  publicity  similar  to  that  now 
required  of  many  public  service  corporations.  That  there 
has  been  much  crookedness  in  connection  with  the  tariff  is 
beyond  dispute.  Honest  enterprises  requiring  protection  and 
the  general  public  should  be  shielded  from  the  greed  of  un- 
scrupulous corporations,  who  are  willing  to  spend  prodigious 
amounts  of  money  and  to  sacrifice  principle  and  law  to  des- 
troy their  competitors  and  plunder  the  public. 

We  have  well  defined  ideas  as  to  the  public  nature  of 
public  service  corporations.  Full  publicity  of  accounts  and 
the  regulation  of  rates  is  everywhere  regarded  as  one  of  the 
prerogatives  and  duties  of  the  government. 

The  protection  given  to  favored  industries  is  in  the  nature 
of  a  public  franchise.  The  public  has  a  direct  financial  in- 
terest in  every  protected  enterprise  and  is  therefore  entitled 
to  complete  information  regarding  the  condition  of  the  busi- 
ness. Protected  interests  should  be  required  to  make  annual 
reports  after  the  manner  of  the  railroad,  gas,  and  insurance 
companies.  The  people  have  a  right  to  know  the  details  of 
the  system,  the  expense  of  operation,  the  rate  of  dividends, 
the  burdens  the  public  has  assumed  in  giving  the  protection, 
and  the  benefits  it  has  received  because  of  the  assumption  of 
these  burdens. 

The  practical  question  for  Congress  is  to  discriminate 
between  worthy  and  unworthy  applicants  for  protection. 
How  much  protection  is  needed?  How  much  is  paid 
for  legal  expenses?  What  competition  is  keenest, 
domestic  or  foreign?  Would  protection,  if  given,  enable 
the  larger  industrial  enterprises  to  destroy  their  smaller 
competitors?  When  will  the  enterprise  become  self- 
supporting?  When  it  is  able  to  stand  alone,  will  it  return 
to  the  people  the  cost  of  protection  in  its  infancy?  Does  the 
return  justify  the  outlay?  H  there  are  protected  enterprises 
that  are  unprofitable  to  the  public  they  should  be  weeded  out. 


36  FREE  TRADE  AND 

The  public  ought  not  to  be  taxed  perpetually  for  any  kind  of 
business  that  will  never  justify  the  expenditure.  Indirect 
benefits,  such  as  greater  independence  and  security  in  time 
of  war,  should  be  considered  in  this  estimate,  but  thoro 
investigation  should  be  made  in  all  cases. 

Legislation  should  be  based  on  information  compiled  by 
disinterested  specialists  paid  by  the  government  and  not  by 
corporations  having  a  direct  pecuniary  interest  therein.  Of- 
ten the  tarifif  is  made  not  only  to  [>rotcct  the  American  manu- 
facturer, but  in  addition  to  shield  him  in  the  extortion  of 
exorbitant  prices  for  his  products.  The  work  of  framing  a 
tarifif  bill  is  a  Herculanean  task.  The  methods  of  gaining  in- 
formation are  inadequate  and  often  unreliable.  Consequent- 
ly, unscrupulous  corporations  are  frequently  able  so  to  mis- 
represent the  facts  as  to  induce  Congress  to  protect  indus- 
tries that  are  abundantly  able  to  compete  with  foreign  en- 
terprises either  at  home  or  abroad.  The  following  illustra- 
tion used  by  Mr.  Cox  and  printed  on  page  453  of  the  Con- 
gressional Record  for  March  30,  1909,  is  a  case  in  point: 

I  want  to  call  attention  to  another  witness  whose  testimony 
has  not  been  given  on  this  floor.  He  appeared  as  the  representa- 
tive of  the  roller  bearing  companies.  Notwithstanding  the  duty 
is  now  50  per  cent,  this  gentleman  asked  for  10  per  cent  more 
On   this   subject   he    said: 

The  following  list  gives  the  prices  at  which  the  bearings  are 
being  sold  in  England  and  Germany  and  at  which  they  are  being 
sold  in  the  United  States,  the  article  in  each  case  being  identi- 
cally the  same  shape,  size,  weight,  design,  material  used,  and 
construction,   and   alike   in   every   particular: 

United 

England.     Germany.    States. 

Price    of    bearings |  $1.44  |  $1.50  |         $2.25 

Do     I  1.38  1  1.44  1  2.13 

Do     I  1.62  I  1.68  i  2.49 

Do      1  2.04  1  1.96  1  2.92 

Do      I  3.84  I 3.84  |  5.76 

He  then  made  two  remarkable  statements:  That  if  tariff  con- 
ditions caused  the  slightest  reduction  in  prices,  his  concern  would 
go  out  of  business:  and.  second,  that  if  the  import  duty  was  not 
satisfactory  he  would  cut  the  wages  of  his  men — the  same  old 
bluff.  If  to  the  table  this  witness  submits  you  add  the  present 
duty  of  50  per  cent  on  the  foreign  articles,  you  have  these  figures 
of   selling   prices    on   English,   German,    and   American   goods: 


PROTECTIOX  37 


England. 

United 
Germany.    States. 

Price    of    bearings 

Do     

1           $2.16 

2.07 

$2.25  1         $2.25 
2.16  1           2.13 

Do                   

2.43 

2.52  1           2.49 

Do             

3.06 

2.94  1           2.92 

Do    

1             5.76  1 

5.76  1           5.76 

Note  how  ingeniously  it  works  out  and  how  closely  the  Amer- 
ican and  foreign  prices  have  been  brought  together.  Now,  for 
the  truth.  I  have  in  my  hand  the  prices  at  which  a  large  auto- 
mobile concern  buys  American  and  foreign  ball  bearings.  Here 
are    the   figures   on    different   sizes: 


American. 

Foreign. 

Price    of    bearings    

Do     

$1.17 
1.33 
2.20 
1.78 
3.70 
3.37 

$1.90 
2.10 

Do     

3.60 

Do                      

2.76 

Do          

5.80 

Do 

5.50 

In  the  table  which  the  witness  presents  there  is  worked  out 
an  average  difference  in  selling  price  on  each  bearing  of  1  3-5 
cents.  As  a  matter  of  fact,  he  is  deriving  from  the  authentic 
table  made  from  the  prices  of  the  American  manufacturer  which 
I  have  quoted  a  differential  in  sale  of  almost  $1  per  bearing,  or, 
to  be  exact,  the  difference  between  $3.11,  the  foreign  average, 
and   $2.26,    the   American    average. 

Xo  intelligent  people  should  tolerate  national  legislation 
based  upon  information  so  uncertain  as  that  given  gratuitous- 
ly by  the  parties  whose  interests  the  legislation  is  designed  to 
protect. 


268525 


AFFIRMATIVE  DISCUSSION 

Nineteenth  Century,  64:  181-5.  August,  1908. 

Roman  Empire.  A  Lesson  in  the  Effects  of  Free  Trade. 
Prince   di  Teano. 

Perhaps  many  still  ignore  the  fact  that  a  condition  of 
International  Free  Trade  necessarily  followed  the  constitu- 
tion of  the  Roman  World-Empire.  Before  Rome  had  ex- 
tended her  authority  over  all  the  Mediterranean  world,  no 
real  commercial  barriers  existed  between  nations  in  the 
sense  in  which  we  understand  them  nowadays;  nevertheless 
effective  barriers  were  created  by  the  difficulty  of  communi- 
cations, the  unsafety  of  commercial  high  roads,  the  state  of 
continuous  warfare  between  tribes  and  nations,  and  the  in- 
stinctive reluctance  of  governments  to  permit  the  free  expor- 
tation of  food-stufifs.  The  danger  of  famine  was  one  of  the 
great  anxieties  of  those  troublous  times.  The  gradual  for- 
mation of  the  Roman  Empire,  embracing  as  it  did,  one  after 
the  other,  the  rich  provinces  which  encircle  the  Mediterra- 
nean basin,  finally  put  an  end  to  the  aforesaid  state  of  affairs. 
From  the  day  in  which  Egypt  passed  under  the  sceptre  of 
Caesar  Augustus,  the  glorious  Pax  Romana  held  sway  over 
all  the  ancient  world  from  the  mouth  of  the  Nile  to  the 
Straits  of  Gibraltar,  overthrowing  all  barriers  and  opening 
in  the  heart  of  the  Empire  the  easiest  and  most  economical 
highway  of  commerce,  the  open  sea. 

Rome  and  Italy,  like  London  and  Great  Britain  of  the 
present  day,  became  the  great  centre  of  attraction  of  the 
Empire,  the  centre  where  the  greatest  wealth  accumulated, 
and  towards  which  the  world's  produce  naturally  converged. 

Italy,  completely  destitute  of  mineral  wealth,  has  always 


40  FREE  TRADE  AND 

been,  since  the  beginning  of  Roman  expansion,  a  countr)' 
essentially  agricultural,  peopled  by  different  races  of  sturdy 
and  thrifty  peasants.  These  knew  how  to  extract  a  meagre 
pittance  from  a  soil  which,  with  the  exception  of  a  few 
favoured  regions,  answers  but  ungratefully  to  the  care  and 
toil  lavished  on  it.  Only  a  few  very  fertile  provinces  can 
bear  comparison  with  the  rich  plains  of  Gaul  or  the  won- 
drous Nile  valley;  the  greater  part  of  Italy  is  poor  and  rocky, 
incapable  of  resisting  the  unrestricted  competition  of  richer 
countries. 

When  therefore  the  Roman  statesmen  opened,  through 
conquest,  all  the  ways  of  the  world,  and  demolished  the 
natural  barriers  which  had  till  then  protected  Italic  agricul- 
ture, the  latter  found  itself  exposed  without  defence  to  the 
merciless  competition  of  other  countries.  First  came  the 
plains  of  Sicily,  considered  at  one  time  the  granary  of  the 
Roman  Republic;  then  the  conquest  of  Gaul  opened  Italy  to 
the  competition  of  Gallic  industry  and  agriculture;  and,  lastly, 
the  inexhaustible  richness  of  the  Nile  valley  dealt  the  death- 
blow to  the  patient  industry  of  the  poor  and  ignorant  Italian 
peasant. 

Nowadaj's  Egypt,  thanks  to  the  wise  British  administra- 
tion, which  reminds  one  of  the  highest  and  most  glorious 
traditions  of  ancient  Rome,  has  shown  again  how  much 
wealth  it  can  produce,  and  what  a  huge  margin  it  leaves  to 
free  exportation. 

The  economical  problems  created  by  the  absorption  of 
Egypt  into  the  Empire  acquired,  moreover,  an  exceedingly 
serious  character  by  the  co-operation  of  a  very  powerful 
political  factor.  The  lords  of  Rome,  for  well-known  rea- 
sons which  I  omit,  inaugurated  that  unhappy  system  of  dis- 
tributing gratuitously  a  daily  ration  of  bread  to  the  teeming 
thousands  of  the  capital.  From  this  deplorable  policy  there 
grew  up  a  numerous  population  of  parasites  who,  without 
producing  anything,  absorbed  annually  an  enormous  amount 
of  food-stuflfs.  The  evil  became  intensified  through  the  fact 
that  Rome,  as  the  administrative  centre  of  the  Empire  and 
the   seat   of  the   Imperial   Court,  attracted   all   the   wealthiest 


PROTECTIOX  41 

and  most  ambitious  men  of  the  time,  who,  in  hopes  of  popu- 
larity or  Imperial  favour,  squandered  vast  sums  of  money 
in  worthless  enterprises  and  lavish  generosity. 

Rome,  whose  population  at  one  moment  surpassed  a  mil- 
lion inhabitants,  became  therefore  a  gigantic  consumer  who 
ought  to  have  constituted  a  great  source  of  wealth  to  Ital- 
ian agriculture.  On  the  other  hand,  the  Imperial  treasury 
through  the  free  distribution  of  such  vast  amounts  of  food- 
stuffs was  overloaded  by  a  financial  charge  which  in  times  of 
trouble  and  distress  became  one  of  its  most  serious  econom- 
ical problems,  and  any  possible  econoiny  would  have  been 
readily  applied. 

If  therefore  the  peasants  had  been  able  to  offer  their  prod- 
uce on  the  market  of  Rome  at  a  price  inferior  to  that  of 
Sicily,  Gaul  or  Egypt,  no  doubt  the  emperors,  or  rather  the 
administrators  of  the  Imperial  treasury,  would  have  given 
preference  to  the  cheaper  Italian  article. 

It  so  happened  instead  that  the  government  of  Rome  only 
partially  nnderstood  the  economical  phenomenon  produced 
by  universal  Free  Trade,  and  ignored  completely  its  causes 
and  its  possible  remedies.  Already  in  the  time  of  the 
Gracchi,  before  the  fall  of  the  Roman  Republic,  the  effects 
of  the  agricultural  crisis,  brought  about  by  the  competition 
of  Sicily,  had  given  birth  to  many  painful  consequences.  The 
great  agitation  with  which  the  name  of  the  Gracchi  is  close- 
ly bound  gives  us  the  first  safe  indication  of  the  economical 
catastrophe  under  which  Italy  was  to  fall. 

The  remedies  tried  in  those  circumstances  by  the  leaders 
of  the  Roman  people  were  of  no  avail,  because  they  failed  to 
grasp  the  real  causes  of  the  evil.  The  crisis  under  the  Em- 
pire became  ever  more  acute,  and  in  Italy  agriculture  slowly 
died  out  as  an  unremunerative  industrj-;  those  fields  from 
which  the  revenue  was  poor  and  uncertain — that  is,  the 
greater  part  of  Italj' — were  gradually  abandoned.  Agricul- 
ture survived  onlj'  in  relatively  happy  conditions  in  some 
restricted  areas,  like  the  valley  of  the  Po  and  Campania,  for 
instance,  where  the  exceptional  richness  of  the  soil  permitted 
the  continuation  of  agriculture  even  with  greatly  diminished 


42  FREE   TRADE   AND 

profits.  The  special  system  of  cultivation,  the  minute  sub- 
division of  property  and  the  conservative  tenacity  of  a  hard- 
working population  saved  those  privileged  regions  from  the 
ruin  which  extinguished  all  life  in  the  rest  of  the  Peninsula. 

Nobody  thought  of  defending  the  native  industry,  for  Italy 
was  but  a  province  of  the  Empire  extending  from  the  banks 
of  the  Euphrates  to  the  Atlantic  coast.  Reasons  of  political 
opportunism,  selfish  hand-to-mouth  principles  of  internal 
polic}',  seemed  more  urgent  and  impelling;  the  highest  eco- 
nomical interests  of  our  unhappy  country  were  sacrificed  to 
these  principles,  and  Italy,  deprived  of  other  resources,  was 
fatally  condemned  to  misery  and  depopulation. 

The  process  was  slow  but  relentless,  it  lasted  several 
centuries,  but  in  the  end  the  country  was  transformed  into  a 
desert;  some  of  the  peasants,  emigrated,  others  became 
shepherds  or  slaves,  and  the  rest  died'  of  hunger.  The 
plains,  once  covered  with  stretches  of  golden  grain,  became 
ovemm  b}'  brambles  and  rank  weeds,  or  sank  back  into 
marshes  teeming  with  game.  The  greater  part  of-  the  coun- 
try was  absorbed  into  the  immense  landed  estates  of  the 
wealthy  Roman  capitalists,  and  formed  those  celebrated 
lafifiiitdia  of  the  later  Rfcman  empire. 

Through  the  erroneous  interpretation  of  historical  phe- 
nomena, the  effects  were  mistaken  for  the  causes,  and  succeed- 
ing generations  formulated  that  celebrated  sophism :  Latifttndia 
Italia  111  perdidere. 

In  conclusion:  Italy  was  ruined  economically  and  aban- 
doned by  her  inhabitants  principally  through  the  formation 
of  the  Roman  Empire,  and  in  consequence  of  the  greatest 
experiment  of  Free  Trade  in  the  history  of  mankind. 

Without  entering  here  into  greater  details  it  is  sufficient 
to  add  that  the  crisis  ruined  Sicily  likewise,  and  inflicted 
heavy  losses  even  on  Gaul  and  Spain.  All  the  weaker  in- 
dustries succumbed  under  the  free  competition  of  those 
countries  where  the  same  goods  could  be  produced  at  a 
lower  price.  It  so  happened  that  the  government  of  the 
Empire,  by  neglecting  the  real  remedies  for  a  problem  of 
such   vital  importance,  permitted,  and  even  encouraged,  the 


PROTECTION  43 

extinction  of  tlie  principal  sources  of  national  wealth.  This 
contributed  in  a  very  high  degree  to  the  great  political  catas- 
trophe of  the  fourth  and  fifth  centuries,  when  the  Barbarians 
overthrew  the  Empire. 

If  the  Roman  statesmen  had  been  able  to  foresee  the  dis- 
aster and  to  understand  its  principal  causes,  and  if  they  had 
tried  to  protect  the  agricultural  industry  on  which  alone 
Italy's  power  relied,  they  might  have  saved  their  country. 
By  giving  means  of  existence  to  a  numerous  population  of 
sturdy  peasants  they  could  have  considerably  modified  the 
course  of  events  during  the  last  centuries  of  the  Empire  and 
through  the  Middle  Ages. 

The  singular  consequence  of  this  state  of  affairs  was  that 
Italy  began  to  pick  up  her  ancient  material  prosperity  only 
after  the  Empire  she  had  founded  went  to  pieces.  Then  the 
natural  barriers  between  nations  were  formed  again  by  the 
splitting  up  of  the  Roman  World,  and  Egypt  ceased  to 
paralyse  Italy  with  her  ruinous  competition.  Then  alone 
with  the  rise  of  prices  agriculture  slowly  revived  all  through 
the  Peninsula,  more  land  came  under  cultivation,  and  the  in- 
habitants gradually  became  more  numerous  in  the  poorer 
parts  of  the  country.  But  an  evil  which  is  the  consequence 
of  an  error  lasting  through  centuries  can  only  be  wiped  out 
through  many  more  centuries  of  slow  and  steady  evolution. 

Italy,  as  is  proved  by  the  present  state  of  the  country 
round  Rome,  in  Sicily  and  elsewhere,  principally  in  the  south 
of  the  Peninsula,  has  not  yet  completelj'^  revived — even  after 
seventeen  centuries — from  the  pernicious  effects  of  Free 
Trade  under  Imperial  Rome.  The  Bills  voted  by  the  Italian 
Parliament  in  these  last  few  years  for  the  agricultural  im- 
provement of  the  Campagna  Romana  are  a  plucky  experi- 
ment of  the  twentieth  century  to  remedy  the  evil  conse- 
quences of  an  economical  error  of  the  builders  of  the  Roman 
Empire. 

I  need  not  add  any  further  comments.  Every  English- 
man who  has  had  the  leisure  to  peruse  this  brief  and  incom- 
plete description  of  one  of  the  most  important  phases  of  the 
world's  history,  will  know  how  to  draw  from  it  those  con- 


44  I'RKK  TRADE  AXD 

elusions  most  useful  for  the  material  and  moral  development 
of  his  great  country. 

Forum.  30:  430-5.  December,  1900. 

Economic   Basis   of  the   Protective  System.     John  P.  Young. 

Protection  has  an  economic  basis.  Its  chief  function  is  to 
eliminate  waste  of  energy  and  wealth.  In  assisting  in  the 
creation  of  new  industries  in  countries  adapted  to  them  it 
performs  this  function  by  conserving  the  former  and  pre- 
venting the  dissipation  of  the  latter.  No  refinement  of  logic 
can  obscure  the  fact  that  it  must  be  cheaper  to  manufacture 
near  the  spot  where  the  raw  material  and  the  food-stuffs 
for  subsisting  operatives  can  be  obtained  than  in  countries 
remote  from  where  the  one  and  the  other  are  produced. 
If  in  the  past  it  has  appeared  that  countries  deficient  in  raw 
materials  and  foodstuffs  were  able  to  manufacture  more 
cheaply  than  those  well  provided  with  raw  and  food  prod- 
ucts, it  was  because  the  countries  with  established  industries 
had  acquired  skill  and  capital.  These  are  purely  artificial 
advantages,  and  no  nation  can  have  a  monopoly  of  them. 
Application  in  new  countries  speedily  results  in  the  acqui- 
sition of  the  former  and  the  amassing  of  the  latter.  The 
experience  of  the  United  States  demonstrates  this  conclusive- 
ly. The  skill  and  wealth  once  having  been  acquired,  there 
can  be  no  question  that  their  application  on  the  spot  of 
production  will  result  in  an  enormous  saving  of  human 
energy  and  of  that  great  source  of  energy — coal. 

It  is  obvious  that  there  is  but  one  method  by  which  a 
country  deficient  in  raw  materials  and  food  stuffs  can  hope  to 
compete  with  a  rival  whose  inhabitants  possess  abundant 
capital,  are  equally  skillful,  and  who  have  in  addition  almost 
inexhaustible  supplies  of  minerals  and  a  practically  unlimited 
capacity  for  the  creation  of  raw  and  food  products.  That 
method  is  to  diminish  the  wages  of  workers  to  a  point  be- 
low that  for  which  the  workers  in  the  more  favored  country 
will  consent  to  work.     But  success  achieved  by  such  means 


PROTECTION  45 

would  not  disguise  the  wastefulness  of  the  process  of  un- 
necessarily hauling  raw  materials  three  thousand  or  more 
miles  to  be  manufactured.  It  could  not  conceal  the  fact 
that  this  unnecessary  transportation  involves  the  expendi- 
ture of  a  vast  quantity  of  human  energy  and  the  dissipation 
of  enormous  quantities  of  coal. 

I  believe  that  the  facts  which  I  have  enumerated  will 
ultimately  receive  general  recognition,  and  that  the  prime 
importance  of  maintaining  a  system  which  will  prevent  the 
wasteful  results  of  unrestricted  competition  will  be  admitted. 
When  it  is  clearly  seen  that  the  attempt  to  secure  temporary 
cheapness  is  not  only  attended  with  immediate  wastefulness, 
but  that  it  also  threatens  permanent  dearness  by  hastening 
the  extinction  of  the  world's  supply  of  mineral  fuel,  it  will 
be  no  longer  possible  for  economists  to  magnify  the  value 
of  external  trade.  The  trouble  with  Cobdenism  is  that  it 
unduly  extols  trade.  In  any  economic  system  the  distribu- 
tor must  play  an  important  part;  but  his  role  is,  after  all, 
only  a  secondary  one.  No  scheme  which  elevates  the  mid- 
dleman above  the  producer  can  be  beneficial  to  mankind. 
Not  all  middlemen  are  useless;  but  Cobdenism  does  not 
distinguish  between  the  useful  and  the  useless  one.  Its 
theory  is  that  the  unnecessary  middleman  performs  as  use- 
ful a  function  as  the  one  really  needed  to  forward  the  work 
of  distributing. 

The  Cobdenite  takes  no  note  of  the  waste  incurred.  He 
fails  to  consider  that  when  competition  is  carried  to  extremes 
it  makes  impossible  the  achievement  of  its  object.  He  ig- 
nores the  fact  that  the  creation  of  an  unnecessary  transpor- 
tation- army  and  the  augmentation  of  the  number  of  useless 
middlemen  of  other  kinds  militate  against  real  cheapness. 
He  notes  that  production  is  on  a  greater  scale  than  formerly, 
and  he  attributes  it  wholly  to  the  effects  of  competition. 
He  refuses  to  take  into  account  that  the  hauling  of  a  bushel 
of  wheat  from  the  plains  of  Dakota  or  the  fertile  valleys  of 
California  does  not  add  to  its  value,  although  the  consumer 
in  England  is  obliged  to  pay  twice  as  much  for  it  as  it  is 
worth  at  the  place  of  production,  or  that  if  it  were  consumed 


46  FREE  TRADE  AND 

in  feeding  men  employed  in  gainful  occupations  near  the 
fields  in  which  it  was  raised  it  would  be  conferring  a  greater 
benefit  than  it  does  at  present.  In  short,  he  refuses  to  see 
that  there  is  no  economic  excuse  for  the  gathering  of  great 
masses  of  people  in  contracted  areas  destitute  of  resources 
sufficient  to  maintain  them,  and  that  there  would  be  a  posi- 
tive economic  gain  by  their  dispersion. 

In  my  opinion,  the  demonstration  is  conclusive  that  the 
free-trade  policy,  which  stands  for  absolutely  unrestricted 
international  competition,  if  it  could  win,  would  result  in 
continuous  waste  and  ultimate  dearness;  while,  on  the  other 
hand,  it  is  equally  plain  that  protection,  by  bringing  producer 
and  consumer  together,  is  an  eliminator  of  waste.  There- 
fore, the  latter  is  the  system  which  must  finally  prevail. 

Home  Market  Club. 

Republican  Presidents  on  Protection. 

AbraJiaiii    Lincoln 

When  we  buy  manufactured  goods  abroad  we  get  the 
goods  and  the  foreigner  gets  the  money.  When  we  buy 
manufactured  goods  at  home  we  get  both  the  goods  and  the 
money. 

U.  S.  Grant 

The  American  system  of  locating  manufactories  next  to 
the  plow  and  pasture  has  produced  a  result  noticable  by  the 
intelligent  portion  of  all  commercial  nations. 

Rutherford   B.   11  ayes 

The  President  of  the  United  States  of  necessity  owes  his 
election  to  office  to  the  suffrage  and  zealous  labors  of  a 
political  party,  the  members  of  which  cherish  with  ardor, 
and  regard  as  of  essential  importance,  the  principles  of  their 
party  organization.  But  he  should  strive  to  be  always  mind- 
ful of  the  fact  that  he  serves  his  party  best  who  serves  his 
country  best. 


PROTECTION  47 

Tames  A.  Garfield 

Our  manufactures  are  rapidly  making  us  industrially  in- 
dependent, and  are  opening  to  capital  and  labor  new  and 
profitable  fields  of  employment.  Their  steady  and  healthy 
growth  should  be  maintained. 

Benjainin  H.  Harrison 

I  believe  that  the  protective  system  has  been  a  mighty 
instrument  for  the  development  of  our  national  wealth  and 
a  most  powerful  agency  in  protecting  the  homes  of  our 
workingmen. 

William  McKinley 

To  increase  production  here,  diversify  our  productive  en- 
terprises, enlarge  the  field  and  increase  the  demand  for 
American  workmen;  what  American  can  oppose  these  worthy 
and  patriotic  objects? 

Theodore  Roosevelt 

Every  class  of  our  people  has  benefited  by  the  protective 
tariff.  During  the  last  few  years  the  merchant  has  seen  the 
export  trade  of  this  country  grow  faster  than  ever  in  our 
previous  history.  The  manufacturer  could  not  keep  his  fac- 
tory running  if  it  were  not  for  the  protective  tariff.  The 
purchasing  power  of  the  average  wage  received  by  the  wage- 
worker  has  grown  faster  than  the  cost  of  living,  and  this  in 
spite  of  the  continual  shortening  of  working  hours.  The 
accumulated  savings  of  the  workingmen  of  the  country,  as 
shown  by  the  deposits  in  the  savings  banks,  have  increased 
by  leaps  and  bounds. 

The  farmer  has  benefited  quite  as  much  as  the  manufac- 
turer, the  merchant  and  the  wage-worker.  American  farm- 
ers have  prospered  because  the  growth  of  their  market  has 
kept  pace  with  the  growth  of  their  farms.  The  men  on 
those  six  million  farms  receive  from  the  protective  tariff  what 
they  most  need,  and  that  is  the  best  of  all  possible  markets. 


48  FREE  TRADE  AND 

So  it  is  as  between  the  capitalist  and  the  wage-worker. 
Here  and  there  there  may  be  an  unequal  sharing  as  between 
the  two  in  the  benefits  that  have  come  by  protection;  but 
benefits  have  come  to  both;  and  a  reversal  in  the  policy 
would  mean  damage  to  both;  and  while  the  damage  would  be 
heavy  to  all,  it  would  be  the  heaviest,  and  it  would  fall  the 
soonest,  upon  those  who  are  paid  in  the  form  of  wages  each 
week  or  each  month  for  that  week's  or  that  month's  work. 
Conditions  change,  and  the  laws  must  be  modified  from  time 
to  time  to  fit  new  exigencies.  But  the  genuine  underlying 
principle  of  protection,  as  it  has  been  embodied  in  all  but 
one  of  the  American  tariff  laws  for  the  last  forty  years,  has 
worked  out  results  so  beneficial,  so  evenly  and  widely  spread, 
so  advantageous  alike  to  farmers  and  capitalists  and  work- 
ingmen,  to  commerce  and  trade  of  every  kind  that  the 
American  people,  if  they  show  their  usual  practical  business 
sense,  will  insist  when  these  laws  are  modified  that  they  shall 
be  modified  with  the  utmost  care  and  conservatism,  and  by 
the  friends  and  not  the  enemies  of  the  protective  system. 
They  cannot  aflford  to  trust  the  modification  to  those  who 
treat  protection  and  robbery  as  synonymous  terms. 

IVilliam    H.    Taft 

The  present  business  system  of  the  country  rests  on  the 
protective  tariff  and  any  attempt  to  change  it  to  a  free  trade 
basis  will  certainly  lead  to  disaster. 

Anything  that  makes  capital  idle,  or  which  reduces  or 
destroys  it,  must  reduce  both  wages  and  the  opportunity  to 
earn  wages. 

The  high  cost  of  living,  of  which  50  per  cent,  is  con- 
sumed in  food,  25  per  cent,  in  clothing  and  25  per  cent,  in 
rent  and  fuel,  has  not  been  produced  by  the  tariflf,  because 
the  tariff  has  remained  the  same  while  the  increases  have 
gone  on.  It  is  due  to  change  of  conditions  the  world  over. 
Living  has  increased  everywhere  in  cost — in  countries  where 
there  is  free  trade  and  in  countries  where  there  is  protec- 
tion— and  that  increase  has  been  chiefly  seen  in  the  cost  of 


PROTECTION  49 

food  products.  In  other  words,  we  have  had  to  pay  more 
for  the  products  of  the  farmer,  for  meat,  for  grain,  for  every- 
thing that  enters  into  food.  Now,  certainly  no  one  will 
contend  that  protection  has  increased  the  cost  of  food  in 
this  country,  when  the  fact  is  that  we  have  been  the  greatest 
exporters  of  food  products  in  the  world.  It  is  only  that 
the  demand  has  increased  beyond  the  supply,  that  the  farm 
lands  have  not  been  opened  as  rapidly  as  the  population  and 
the  demand  has  increased.  .  .  .  We  have  a  much  higher 
standard  of  living  in  this  country  than  they  have  abroad,  and 
this  has  been  made  possible  by  higher  income  for  the  work- 
ingman,  the  farmer,  and  all  classes.  Higher  wages  have 
been  made  possible  by  the  encouragement  of  diversified  in- 
dustries, built  up  and  fostered  b}'  the  tariff. 


Gunton's  Magazine.  23:  465-75.  December,   1902. 
Protection   a   National   Doctrine. 

For  more  than  half  a  century  New  England  has  been 
the  special  beneficiary  of  protection;  almost  every  New  Eng- 
land industry  has  been  the  special  object  of  protection;  but, 
unfortunately,  in  New  England  protection  appears  to  have 
been  treated  more  as  a  special  privilege  than  as  a  national 
polic3^  New  England  manufacturers  have  done  much  to  en- 
courage, not  to  say  justify,  the  enemies  of  protection  in  their 
persistent  announcement  that  a  protective  tariff  is  business 
favoritism  by  political  methods.  Thej-  are  very  eager  for 
protection  for  what  they  have  to  sell,  but  they  want  free 
trade  for  what  they  have  to  buy.  They  want  protection  for 
manufactured  products,  but  free  trade  for  raw  material;  in 
short,  they  want  protection  for  the  industries  of  New  Eng- 
land and  free  trade  for  the  industries  of  the  South  and  West. 
The  woolen  manufacturers  want  high  protective  duty  on 
woolens,  but  free  wool.  The  iron  and  steel  manufacturers 
want  protection  for  iron,  steel  and  metal  products,  but  free 
iron  ore. 

That  is   not  protection;  it  is   favoritism.     It  is  using  the 


50  FREE  TRADE  AND 

government  to  aid  the  business  of  particular  sections.  Such 
a  use  of  tariff  schedules  is  a  travesty  on  the  idea  of  protec- 
tion. Protection  is  not  a  scheme  for  dealing  out  personal  or 
local  favors;  it  is  a  principle  of  national  development.  The 
object  of  protection  is  not  to  make  somebody  rich,  or  to 
give  some  group  or  locality  an  advantage  over  others,  but 
it  is  to  create  the  conditions  of  national  advancement  and 
prosperity.  The  object  of  protection  is  to  vouchsafe  to  the 
people  of  the  United  States  all  the  stimulus  and  opportunity 
that  the  American  market  will  afiford  for  industrial  experi- 
inentation  and  development.  It  is  no  less,  but  if  anything 
more,  important  to  the  national  w^elfare  that  this  stimulating 
inducement  should  exist  in  the  South  and  West  and  in  the 
East.  If  protection  is  worth  considering  and  applying  at  all, 
it  is  as  a  national  policy  based  upon  sound  political  philos- 
ophy. From  no  other  point  of  view  is  it  worth  considering. 
Protection  had  better  be  abandoned  altogether  than  used  for 
dealing  out  special  favors. 

This  prevalent  habit  of  regarding  protection  as  a  scheme 
of  dispensing  favors,  instead  of  a  principle  of  public  policy,  is 
responsible  for  much  of  the  business-disturbing  agitation 
with  which  the  nation  is  periodically  afiflicted.  Froni  this 
point  of  view  the  tarifif  is  naturally  regarded  as  a  matter  of 
personal  or  local  interest,  instead  of  impersonal  national 
policy.  This  view  tends  to  stimulate  narrow,  selfish  and  al- 
together unpatriotic  and  uneconomic  treatment  of  the  sub- 
ject; it  leads  to  a  system  of  barter  and  bargain  in  the  mak- 
ing of  schedules.  Under  this  idea  of  the  subject  one  group 
of  producers  is  ready  to  barter  away  the  interests  of  an- 
other or  of  the  nation  to  secure  favors  for  themselves.  The 
raw-material  producers  of  the  South  and  West  become  sus- 
picious of  the  protection  afforded  the  manufacturers  of  the 
East,  and  the  eastern  manufacturers  are  correspondingly  will- 
ing to  sacrifice  the  interests  of  the  South  and  West  for  an 
advantage  to  themselves. 

This  is  the  basis  upon  which  business-disturbing  tariff 
agitations  chiefly  rest.  The  New  England  manufacturers 
demand  protection   for  their   products,  but  clamor   for   free 


PROTECTION  51 

raw  material.  Duty  on  raw  materials,  they  say,  prevents 
them  from  making  inroads  upon  foreign  markets.  If  they 
could  only  have  free  wool,  free  hides,  free  iron  ore,  free  tin, 
and  free  everything  that  they  use  in  manufacture,  they  could 
successfully  compete  in  foreign  markets;  but  they  forget,  or 
fail  to  see,  that  if  they  buy  all  their  so-called  raw  materials 
from  foreigners  they  will  destroy  much  of  the  home  market 
for  their  products.  If  the  wool,  iron  and  other  raw  materials 
are  to  be  imported,  then  the  labor  and  capital  employed  in 
producing  these  commodities  will  be  dislocated  and  much  of 
our  domestic  consumption  and  industrial  prosperity  de- 
stroj-ed.  This  altogether  mistaken  and  narrowly  selfish  view 
entertained  by  our  eastern  manufacturers,  particularly  in 
New  England,  was  one  of  the  chief  causes  of  the  industrial 
wreck  of  1893.  There  is  a  certain  class  who  are  free-traders 
by  conviction  and  tradition,  who  are  constantly  alert  for 
every  opportunity  to  propagate  what  they  believe  to  be 
sound  political  doctrine.  To  this  there  can  be  no  legitimate 
objection;  but  those  who  believe  in  protection  and  expect  to 
benefit  by  it,  and  yet  are  ready  to  reduce  it  to  this  bargain- 
counter  basis,  are  entitled  to  no  such  respect. 

The  agitation  for  free  trade  during  the  latter  8o's  and 
early  go's,  by  the  propaganda  of  abstract  doctrine,  could 
never  have  compassed  the  election  of  Mr.  Cleveland  with 
his  anti-tariff  policj'  had  it  not  been  for  the  support  and  the 
backing  of  what  appeared  to  be  the  practical  business  men 
and  manufacturers  who  lent  themselves  to  the  anti-tariff 
crusade  under  the  plea  of  free  raw  materials.  They  suc- 
ceeded in  getting  free  raw  materials,  but  they  also  destroyed 
every  opportunity  to  use  any  raw  materials.  In  trying  to 
secure  a  benefit  for  themselves  at  the  expense  of  others, 
Samson-like,  they  pulled  down  the  whole  edifice,  only  to 
find  themselves  involved  in  the  debris  of  an  industrial  catas- 
trophe. 

Much  the  same  thing  is  going  on  now  that  occurred  a 
dozen  years  ago.  In  1902,  as  in  1892,  the  cry  is  being  raised 
for  a  New  England  tariff;  namely,  protection  for  what  New 
England  sells  and  free  trade   for  what  it  buys;  and  the  ad- 


52  FREE  TRADE  AND 

vocates  of  "tariff  reform"  (which  means  tariff  destruction) 
are  again  making  the  most  of  this  plea,  insisting  that  the 
manufacturers  want  taniff  revision.  This  movement  is  not 
3'et  strong  enough  to  force  a  successful  political  issue  for  a 
purely  revenue  tariff,  but  it  is  taking  the  more  insidious  form 
of  reciprocity. 

Reciprocity  is  only  another  name  for  a  scheme  to  dicker 
away  the  American  market  by  special  bargain  instead  of  by 
general  policy.  It  is  a  scheme  for  introducing  free  trade  in 
spots  liy  special  bargains — a  scheme  for  sacrificing  one  in- 
dustry for  the  benefit  of  another.  This  fits  in  well  enough 
with  the  free  trade  idea,  because  from  that  point  of  view 
every  addition  to  the  free  list,  no  matter  how  accomplished, 
is  so  much  net  gain  toward  free  trade;  enough  of  it  would 
destroy  the  whole  protective  system.  The  influence  of  this  is 
to  undermine  the  economic  validity  of  the  entire  protective 
policy.  It  practically  says  to  the  business  interests  of  the 
country:  If  you  want  free  raw  materials,  or  want  access  to 
any  particular  foreign  market,  lobby  in  Congress  for  a  reci- 
procity treaty  which  shall  sacrifice  some  industry  for  your 
benefit.  And  it  practically  says  that  if  you  will  spend  money 
enough  in  the  lobby  you  can  buy  the  entry  into  any  market 
you  .desire.  On  this  plan  one  set  of  American  industries 
becomes  pitted  against  another  set  for  sacrifice,  instead  of 
all  being  united  for  a  policy  which  shall  be  beneficial  to  the 
whole  country.  Thus  we  have  a  certain  group  of  manufac- 
turers asking  for  a  Cuban  treaty  which  shall  sacrifice  the 
tobacco  and  sugar  industries  in  order  that  their  goods  may 
have  easy  entry  into  Cuba.  The  manufacturers  of  agricul- 
tural implements  of  the  West  are  willing  and  eager  to  sac- 
rifice the  knitting  goods  manufacturers  of  the  East  for  their 
easy  entrj^  into  France;  and  so  on.  Under  the  impression 
that  this  is  a  liberal  progressive  policy,  the  administration  is 
favoring  if  not  definitely  committing  itself  to  this  bartering 
away  of  one  American  industry  for  the  benefit  of  another,  in 
the  name  of  reciprocity. 

This  is  all  wrong.  If  protection  is  a  sound  policy,  then 
it    should    and    must    be    a    national    doctrine.     It    should   be 


PROTECTION  S3 

treated  as  a  permanent  political  principle,  that  whatever  is 
worth  having  is  worth  protecting.  The  thing  most  of  all 
worth  having  in  this  country,  because  it  is  the  basis  of  all 
else,  is  business  prosperity  and  industrial  development.  The 
one  thing  indispensable  to  the  national  development  of  in- 
dustry is  opportunity.  This  does  not  mean  merely  to  give 
permission  for  a  free-handed  scramble  with  the  world.  Op- 
portunity means  possiblity.  The  possibility  for  the  develop- 
ment of  industry  in  its  infinite  variety  of  forms  means  a 
market.  There  is  but  one  market  that  we  can  give  to  Ameri- 
can capital,  and  that  is  the  American  market,  which  is  the 
best  in  the  world,  and  we  can  offer  it  as  an  inducing  oppor- 
tunity for  capital;  not  as  a  personal  privilege  or  favoritism, 
but  as  a  general  inducement  to  exploit  and  diversifj'-  the 
economic  possibilities  of  the  nation,  and  thereb\'  stimulate 
the  social  possibilities  of  the  people. 

Foreign  markets  are  desirable,  but  only  as  an  incident  to 
domestic  progress.  The  home  market  is  the  place  for  exper- 
imentation and  progress  of  industrial  methods  and  accom- 
plishment, and  it  is  the  best  place.  It  is  here,  if  at  all,  that 
we  must  develop  our  industrial  superiority  over  other  nations; 
it  is  important,  therefore,  to  our  very  growth  as  a  nation 
that  we  must  protect  this  great  opportunit}^  as  the  field  for 
our  economic  experimentation.  Foreign  markets  are  of  sec- 
ondarj'  interest,  because  they  are  of  secondary  value,  eco- 
nomically and  commercially.  Domestic  production  and  con- 
sumption contribute  more  to  the  civilization  and  growth  of 
the  nation  than  foreign  trade  can  ever  do,  because,  besides 
having  all  the  profits  and  wages  earned  and  expended  at 
home,  it  affords  the  industrial  and  social  experience  out  of 
which  greater  development  and  national  growth  alone  can 
come.  Any  foreign  trade  that  is  secured  by  lowering  home 
conditions  or  by  the  sacrifice  of  a  home  industry  is  an 
injury  to  the  nation.  The  cheapness  bj'  which  we  shall 
undersell  foreigners  abroad  should  and  must  come,  not 
through  lowering  our  social  standard  at  home,  nor  by  the 
sacrifice    of    any    domestic    industry,     but    by    the    greater 


54  FREE  TRADE  AND 

economy  secured  through  our  higher  wage  level,  inventive 
intelligence  and  superior  methods. 

Reciprocity,  especially  as  now  advocated,  is  a  direct  at- 
tack upon  the  protective  principle  and  policy.  It  is  an  at- 
tempt to  do,  by  special  bargain  with  some  industries,  what 
those  who  are  advocating  it  would  like  to  do  with  all,  name- 
ly, destroy  protection.  It  proposes  to  sacrifice  certain  do- 
mestic interests  to  give  certain  other  industries  easy  entrance 
to  Cuba.  Other  industries  are  to  be  sacrificed,  that  certain 
industries  may  get  easy  access  to  Canada;  and  again  others, 
that  some  special  products  may  find  access  to  France,  and 
to  Germany,  and  so  on.  In  each  case  American  industry  is 
sacrificed,  and  so  one  by  one  domestic  industries  are  to  be 
stricken  down.  Of  course  this  is  an  ingenious  way  of  en- 
larging the  free  list  and  paring  away  the  protective  policy. 
If  it  could  continue,  it  would  soon  have  free  trade  applied 
to  a  sufificiently  large  number  of  industries  so  that  protec- 
tion to  the  rest  would  not  be  worth  while,  and  in  fact  could 
not  be  maintained. 

Such  a  policy  is  neither  good  economics,  good  states- 
manship, nor  even  good  politics.  There  is  a  large  number 
of  honest  people  who  are  caught  by  it,  just  as  the  fly  is 
inveigled  by  the  spider,  but  the  real  advocates  of  this  reci- 
procity proposition  are  those  who  seek  to  destroj'  the  pro- 
tective system  because  they  do  not  believe  in  it.  They  are 
free-traders  by  conviction.  They  are  honest  in  their  desire 
to  destroy  protection,  but  they  are  urging  reciprocity  as  a 
sneak  method  of  catching  those  whose  protection  is  based 
more  on  personal  interest  than  economic  and  political  prin- 
ciple. 

Moreover,  reciprocity  is  bad  policy  because  it  will  tend 
to  disturb  the  harmony  of  our  political  relations  with  foreign 
countries.  It  is  unnecessary  to  say  that  at  bottom  the 
foreign  policy  of  all  modern  nations  now  arises  from  an 
industrial  and  commercial  motive;  it  once  was  mere  dj^nastic 
authority,  but  with  the  development  of  industrialism  the 
motive  has  been  transferred  to  business  advantage.  The 
hungry  struggles   of  the   different  nations   in   China  are   not 


PROTECTION  55 

merel}^  to  exercise  authority  in  China,  but  rather  to  get 
possession  of  the  Chinese  market  for  trade  purposes.  That 
is  the  object  of  the  diplomatic  fencing  that  is  going  on  re- 
garding the  innovation  of  western  civilization  in  the  Orient. 
Who  shall  have  the  market  is  the  great  problem,  and  with 
no  country  is  the  motive  clearer  than  the  United  States. 
We  haA^e  announced  that  we  want  no  territorial  authority  in 
China;  we  want  no  "sphere  of  influence,"  but  we  insist  upon 
the  open  door,  which  simply  means  that  we  shall  have  the 
free  right  to  enter  that  market.  Of  course,  this  is  a  much 
higher  motive  than  mere  territorial  aggrandizement  by  mili- 
tary authority.  It  is  obvious,  however,  that  if  we  are  to  re- 
tain the  frank  friendship  of  foreign  nations  we  must  deal 
with  them  all  fairly  regarding  their  industrial  opportunity  in 
the  United  States.  This  is  the  best  market  in  the  world,  and 
they  know  it.  Any  nation  would  give  more  for  free  en- 
trance to  the  market  of  the  United  States  than  to  have  a 
monopoly  of  China. 

Every  reciprocity  treaty  is  a  discrimination  in  favor  of 
some  particular  nation  against  others.  To  the  extent  that 
this  is  carried  out,  it  is  sure  to  create  displeasure,  and  ulti- 
mately political  animosity.  If  by  some  dicker  we  sacrifice  a 
home  industry  to  let  France  have  a  special  advantage,  say 
over  Germany,  for  knit  goods  in  the  United  States,  Germany 
is  going  to  be  less  cordial  in  her  relations  with  us.  Why 
should  she  not? — and  vice  versa.  More  than  any  otlier  na- 
tion, we  have  outgrown  militarism;  we  represent,  in  the 
highest  form  yet  developed,  industrial  civilization,  which  is 
preeminently  peaceful  civilization.  Our  policy,  therefore, 
should  be  not  merely  peaceful  in,  its  motive  but  harmonious 
and  peaceful  in  its  tendency.  We  are  conscious  of  having 
the  best  and  therefore  the  most  coveted  market  in  the  world, 
and  our  policj^  should  be  to  protect  all  the  opportunities 
that  market  affords  to  our  own  people,  giving  encouragement 
and  security  to  all  the  efforts  that  invested  capital, 
genius  and  superior  labor  can  develop.  Our  for- 
eign policy  should  be  to  admit  the  outside  nations  to  that 
market   on    equal   terms;   all   who    can   enter   the   American 


56  FREE  TRADE  AND 

market  on  American  conditions  should  be  welcomed  on 
equal  terms.  Protection  should  not  be  in  small  circles 
around  special  industries,  but  should  encircle  the  nation;  it 
should  be  high  enough  adequately  to  cover  the  difference 
in  labor  cost  here  against  the  lowest  competing  labor  cost 
abroad,  not  the  highest.  As  a  chain  is  no  stronger  than  its 
weakest  link,  protection  will  adequately  protect  only  when 
It  adequately  covers  the  difference  between  American  labor 
cost  and  the  lowest  competing  labor  cost  abroad. 

All  who  would  enter  the  American  market  would  thus 
be  compelled  to  pay  the  equivalent  of  American  wages;  what 
they  failed  to  pay  in  wages  to  th'eir  labor  at  home  they  would 
have  to  pay  in  duty  on  coming  here.  This  places  the  com- 
petition in  the  American  market  upon  an  economic  basis 
which  rests  on  the  American  standard  of  living  and  civiliza- 
tion. This  is  sound  political  science;  it  is  a  principle  which 
applies  to  all  countries.  The  basis  of  competition  in  every 
country  should  be  the  social  standard  of  living  and  labor  cost 
of  that  country.  No  nation  should  ever  permit  its  domestic 
products  to  be  undersold  by  foreign  products  whose  cheap- 
ness depends  upon  lower  wages  and  an  inferior  standard  of 
living.  The  right  of  foreign  competition  to  succeed  in  a 
domestic  market  should  always  be  made  to  depend  upon 
economic  superiority,  and  never  upon  social  inferiority.  In 
other  words,  superior  economic  methods  and  higher  produc- 
tive skill  and  capacity  are  the  only  means  by  which  foreign 
products  should  ever  be  permitted  to  undersell  domestic 
products  in  a  domestic  market.  To  permit  the  products  of 
domestic  industry  to  be  undersold  and  the  industry  destroyed 
by  the  products  of  lower  paid  labor  abroad  is  as  immoral  as 
it  is  uneconomic;  it  is  permitting  pauperism  to  undermine 
and  destroy  civilization,  which  is  a  crime  against  the  race. 

The  same  is  true  of  our  competition  in  foreign  inarkets. 
The  only  true  ethical  as  well  as  economic  basis  on  which 
American  capitalists  can  compete  in  foreign  markets  is  by 
the  use  of  superior  skill  and  productive  methods;  in  short, 
by  being  able  through  science  and  civilization  to  furnish 
cheaper  and  better  goods.     There  is  neither  economic,  ethi- 


PROTECTION  57 

cal  nor  political  merit  in  being  able  to  undersell  foreign 
producers  in  their  own  market  through  a  special  privilege 
secured  by  a  government  dicker. 

Moreover,  this  system  of  reciprocity  is  uncertain;  it  puts 
business  on  a  political  instead  of  an  economic  basis.  An 
industry  may  be  greatly  stimulated  by  a  reciprocity  treaty 
to  the  extent  that  it  succeeds  in  enabling  American  pro- 
ducers to  destroy  the  industry  of  another  country,  until  great 
discontent  and  political  agitation  may  call  for  a  reversal.  In 
other  countries  it  may  create  retaliation,  and  thus  act  a.s  a 
boomerang.  But  if  our  trade  abroad  rests  upon  a  purely 
meritorious  competitive  economic  foundation,  it  will  be  per- 
manent and  lasting.  If,  for  instance,  under  our  high-wage 
protective  conditions,  the  demand  is  specially  large  to 
develop  the  capacity  for  making  locomotives  cheaper  in  the 
United  States  than  in  any  other  country,  then  every  dollar's 
worth  of  foreign  trade  is  a  permanent  addition,  because  it  is 
secured  without  political  privilege  and  through  pureh'  econ- 
omic superiority.  Such  foreign  trade  is  going  to  last:  it  is 
going  to  increase;  but  every  attempt  to  subject  our  own  in- 
dustries to  political  barter  and  give  special  privileges  to  cer- 
tain American  industries  abroad  is  introducing  into  our  in 
dustrial  life  uncertainty  and  disturbance,  substituting  the 
exigencies  of  foreign  politics  for  an  economic  basis  of  in- 
dustry, with  a  constant  motive  for  political  corruption. 

One  of  the  most  misleading  phases  of  this  reciprocity  dis- 
cussion is  the  so-called  sympathy  or  moral  responsibility  for 
other  nations-,  so  conspicuously  displayed  in  the  case  of 
Cuba.  This  is  not  merely  unsound;  it  is  maudlin  sentiment. 
The  true  way  to  help  other  nations  is  not  to  destroy  dtir 
own  industries  in  order  charitably  to  buy  their  products, 
but  on  the  contrary  it  is  to  make  the  most  of  our  own  pos- 
sibilities, and  give  others  the  benefits  of  our  discoveries  and 
superior  methods.  Charitably  to  surrender  our  own  markets 
to  the  poorer  nations  is  simply  to  let  them  drag  us  down. 
Progress  demands  that  we  should  lift  them  up,  and  the  only 
way  to  help  lift  Cuba  and  other  countries  to  our  own  level 
is  to  give  them  the  benefit  of  the  superior  devices  and  dis- 


58  FREE  TRADE  AND 

coveries  resulting  from  our  own  experimentation  and  prog- 
ress. In  the  numerous  lines  in  which  we  have  excelled  suf- 
ficiently to  be  able  to  sell  products  cheaper  abroad  than  they 
can  be  produced  there  with  their  own  cheap  labor,  we  have 
made  discoveries  that  foreigners  can  and  will  adopt,  and  in 
doing  so  they  will  get  an  everlasting  benefit  which  will  be 
worth  far  more  to  them  than  the  permission  to  sell  in  our 
market  and  thereby  prevent  the  development  of  these  super- 
ior methods,  thus  perpetuating  their  own  relatively  crude 
and  clumsy  devices. 

The  true  American  policy  is  the  simple  straightforward 
policy:  Protect  the  American  market  with  all  its  opportuni- 
ties for  the  American  people;  give  no  special  privileges  to 
any  foreigners  to  sell  in  this  country;  let  all  enter  on  the 
same  plane,  namely,  by  being  able  to  compete  on  American 
conditions,  which  always  must  involve  the  payment  of  the 
full  equivalent  of  American  wages.  And  let  our  foreign 
trade  be  a  natural,  wholesome,  economic  growth,  by  which 
American  producers  shall  compete  on  the  sound  economic 
basis  of  being  able  to  undersell,  not  by  any  special  privilege 
but  by  the  superiority  of  American  methods  and  skill.  Such 
a  policy  is  good  ethics,  good  economics  and  sound  states- 
manship. 

Nineteenth  Century.  54:  202-15.  August,  1903. 

Free  Trade  and  Protection.     M.   Maltman   Barrie. 

Such,  then,  is  the  condition  of  the  worker,  a  virtual  slave, 
condemned  to  labour  on  a  subsistence  wage.  How  is  that 
condition  to  be  altered?  How  is  the  doom  to  be  evaded? 
To  answer  that  question  we  must  first  ascertain  why  the 
worker  is  in  that  condition,  what  is  the  cause  of  his  economic 
subjection.  The  cause  lies  upon  the  surface:  it  is  competi- 
tion. This  competition  confronts  the  worker  in  two  forms, 
firstly,  in  the  form  of  the  labour  of  his  fellows  in  the  labour 
market,  and,  secondly,  in  the  form  of  the  finished  article,  the 
product  of  foreign  labour,  in  the  product  market.     How  has 


PROTECTION  59 

the  British  worker  grappled  with  these  evils  in  the  past? 
How  does  he  propose  to  grapple  with  them  in  the  future? 
And  what  help,  if  any,  can  he  look  for  through  Mr.  Cham- 
berlain's proposals?  The  British  workman  is  not  open  to 
the  charge  of  excessive  perceptiveness,  but  he  has  at  times 
realised,  in  a  dim  sort  of  way,  the  first  of  these  evils,  and 
made  some  spasmodic  efforts  to  remedy  it.  Some  years  ago 
he  was  very  earnest  about  an  Eight  Hours  Day,  and  marched 
with  bands  and  banners  to  Hyde  Park  to  affirm  his  devotion 
to  that  plan.  But,  latterly,  other  toys  have  attracted  his 
attention;  and  when  he  now  marches  to  Hyde  Park  it  is  to 
denounce  a  Tory  peer  for  not  allowing  his  workmen  to 
manage  his  business,  or  to  insist  on  the  secular  and  spiritual 
rights  of  the  Nonconformist  Conscience. 

But,  even  in  his  advocacy  of  a  shorter  labour  day,  the 
British  worker,  or,  to  be  more  just,  his  leaders,  display  a  lack 
of  intelligence  that  must  have  surprised  everybody  who  did 
not  know  them.  Many  of  these  leaders  did  not  understand 
the  proposal  to  which  they  had  assented,  and  many  more 
shrank  from  its  logical  application.  Some  advanced  it  as  a 
plea  on  behalf  of  the  physical  health  of  the  workers,  alleg- 
ing, truly  enough,  that  prolonged  labour  is  physically  injur- 
ious. And,  in  order  to  disarm  the  hostility  of  employers 
and  the  employing  classes,  they  suggested  that  the  workers, 
by  working  harder  during  the  shorter  day,  would  produce  as 
much  as  in  the  longer.  Others  urged  it  as  a  philanthropic 
scheme  for  enabling  the  working  man  to  have  more  oppor- 
tunities for  mental  culture  and  domestic  society,  and  these, 
also,  promised  the  employers  that  there  would  be  no  diminu- 
tion of  the  output.  Only  a  small  portion  advocated  the 
shortening  of  the  hours  of  labour  as  a  means  of  spreading 
employment  amongst  a  greater  number  of  workers,  and  even 
these  failed  to  carry  their  proposal  to  its  logical  end,  the 
only  end  that  is  really  worth  troubling  about,  that  end  being, 
of  course,  the  total  absorption  of  all  the  surplus  labour  in 
the  market,  so  that  not  one  single  unemployed  man  re- 
mained. Apparently  none  of  them  realised  that  to  stop 
short  of  that  point  is  to  defeat  the  whole  purpose,  and  that 


6o  FREE  TRADE  AND 

any  surplus  in  the  labour  market,  however  small,  will  suffice 
to  give  the  employers  the  whip  hand  and  compel  the  work- 
ers to  accept  a  subsistence  wage. 

But  behind  the  native  labour  market,  which  it  was  the 
object  of  the  Eight  Hours  movement  to  deplete,  stands  the 
foreign  labour  market,  from  which  the  native  market  is  being 
constantly  recruited.  The  number  of  these  recruits  is  var- 
iously estimated,  but  it  is  admitted  that  it  is  very  great, 
several  thousands  weekly.  And  if  their  number  is  great,  so 
also  is  their  poverty;  so  great,  indeed,  that  their  compul- 
sory entrance  as  'blacklegs'  into  the  British  native  labour 
market  can  only  be,  after  their  landing,  a  question  of  hours. 
What  has  been  in  the  past,  and  what  is  still,  the  attitude  of 
the  accredited  spokesmen  of  British  labour  on  this  matter? 
Incredible  as  it  may  be,  it  is  nevertheless  the  fact  that  the 
attitude  of  these  gentlemen  on  this  subject  was,  and  is,  one 
either  of  positive  approval  or  of  absolute  indifference.  Yet. 
obviously,  it  would  be  useless  to  absorb  the  present  surplus 
in  the  native  labour  market  if  the  stream  of  labour  from  the 
foreign  market  is  to  continue  to  run. 

The  second  form  in  which  competition  confronts  the 
British  worker,  the  form  namely  of  the  linished  article,  the 
product  of  foreign  labour,  comes  next  to  be  considered.  We 
have  seen  that,  in  the  interest  of  the  worker,  the  present 
surplus  in  the  native  labour  market  must  be  absorbed  by 
shortening  the  present  labour  day,  and  that  all  foreign  la- 
bour must,  in  the  future,  be  excluded.  But  of  what  use  will 
it  be  to  exclude  foreign  labour  if  the  products  of  foreign 
labour  are  admifted?  It  is  not  the  foreigner's  labour  that 
the  British  employer  wants :  it  is  the  product  of  his  labour. 
Therefore,  so  far  as  the  British  employer  is  concerned — and 
the  British  consumer  stands  behind  him — the  British  work- 
man may  exclude  foreign  labour,  and  legislate  his  own  work- 
ing day  down  to  zero,  if  he  likes,  so  long  as  he  admits  the 
finished  article.  It  is  quite  true,  of  course,  that  even  then, 
even  with  unlimited  free  imports,  some  actual  labour  would 
be  required  at  this  end;  but  the  amount  of  that  labour  would 
be  so   small  that   a   labour  day  short   enough   to  divide  that 


PROTECTION  6i 

labour  equally  amongst  all  the  workers  in  the  country  would 
be  practically  impossible  of  attainment.  Only  a  revolution- 
ary Parliament  would  enact  such  a  law.  and  I  do  not  pro- 
pose nor  anticipate  an   early  revolution. 

But  here,  again,  the  innate  conservatism  of  the  British 
labour  leader  asserts  itself  more  stubbornly  than  ever.  Even 
the  most  enlightened  of  them,  those  few  who  see  the  neces- 
sity of  excluding  foreign  labour,  shrink  from  excluding  for- 
eign products.  It  is  a  question  of  religion  with  them.  The 
exclusion  of  foreign  labour  is  all  right,  they  saj-,  that  is  trade 
unionism ;  but  the  exclusion  of  the  products  of  foreign  labour. 
that  would  be  an  interference  with  free  tra.de!  Some  years 
ago  I  witnessed  a  curious  incident  bearing  on  this  point.  A 
large  building  in  a  leading  London  thoroughfare  was  being 
erected.  All  the  outer  walls  were  up,  but  the  woodwork  was 
barely  started.  At  this  stage  the  Society  of  Carpenters  and 
Joiners,  for  some  reason  or  other,  ordered  a  strike,  and  called 
their  members  off  this  particular  job,  amongst  others.  I  ob- 
served the  society's  'pickets'  for  some  time,  and  saw  them 
turn  back  several  'blacklegs'  who  wished  to  go  in  to  work.  So 
far,  well.  But  presently,  down  the  street  came,  slowly  and 
leisurely,  an  open  lorry  laden  with  ready-made  doors  and  win- 
dows, an  importation  from  Sweden.  The  gates  of  the 
works  swung  slowly  on  their  hinges  and  the  lorry,  with  its 
load,  passed  slowly  in.  The  'pickets,'  who  would  have 
broken  the  head  of  any  Englishman  who  had  gone  in  that 
gate  to  make  those  doors  and  windows,  lifted  no  finger, 
uttered  no  word  to  prevent  the  passing  of  the  finished,  for- 
eign-made article.  To  have  done  so  would  have  been  a 
'violation  of  the  sacred  principle  of  free  trade.' 

In  striking  contrast  to  the  free  trade  religion  of  the  aver- 
age British  tr«ide  unionist  leader  is  the  protectionism  of  the 
working  class  in  all  our  Colonies  and  in  the  United  States  of 
America.  These  workmen  are  as  ardent  trade  unionists  as 
are  their  British  fellows;  but  they  are  protectionists  to  a 
man.  The  reason  for  this  is,  in  my  opinion,  that  these 
Colonists  and  Americans  had  the  advantage  of  starting  life 
in    practically    new    countries,    under    virgin    conditions,    and 


62  I'REE  TRADE  AND 

absolutely  uptrammelled  by  prepossessions.  They  were  free 
to  judge  all  questions  on  their  merits,  and  had  a  clean  slate 
on  which  they  could  write  their  own  unbiassed  judgments. 

What  is  free  trade?  It  is  free  exchange.  But  we  have 
not  got  it.  We  have  free  imports,  with  slight  exceptions, 
and  taxed  exports,  with  slight  exceptions,  and  all  the  other 
nations  and  our  own  Colonies  have,  practically,  protection. 
Free  exchange,  the  absence  of  all  obstacles  to  commercial 
intercourse,  is,  no  doubt,  the  ideal  method  of  exchange  from 
the  consumer's  point  of  view;  for  by  it  he  would  obtain  his 
commodities  at  prices  lower  than  would  otherwise  be  pos- 
sible. But,  with  a  surplus  in  the  general  labour  market,  free 
trade  is  fatal  to  the  producer.  If  the  French  silk  manufac- 
turer and  the  British  coal-owner  agreed  to  exchange  their 
wares  without  the  intervention  of  the  customs  officer,  the 
result  would  of  course  be  a  saving  of  expense,  tantamount  to 
a  reduction  in  the  cost,  the  natural  price,  of  these  commodi- 
ties. But  who  would  be  benefited  by  that,  by  the  non-inter- 
vention of  the  customs  officer?  Not  the  sellers  of  the  arti- 
cles on  either  side,  for  the  competition  of  their  fellows  would 
prevent  them  adding  an  imaginary  duty  to  the  cost;  and 
certainly  not  the  actual  producers,  the  French  silk  weaver 
and  the  British  collier,  if  there  was,  as  now,  a  surplus  in 
their  respective  labour  markets,  keeping  their  wages  down 
to  the  subsistence  point.  The  only  persons  who  would  bene- 
fit by  the  non-intervention  of  the  customs  officer  would  be 
the  idle  consumers  of  the  two  commodities  on  both  sides  of 
the  Channel.  These  would  obtain  their  commodities  at  a 
price  lower  by  the  amount  of  the  customs  officer's  salary  and 
expenses;  that  is  the  whole  story  of  free  trade. 

What,  on  the  other  hand,  is  protection?  It  is  a  system  by 
which  nations  set  up  barriers  at  their  ports  and  frontiers 
against  the  trade  of  other  nations.  The  barriers  take  the 
form  of  duties,  or  taxes,  levied  on  such  trade,  and  are  erected 
for  two  separate  and  distinct  objects.  In  some  cases  the 
tax  is  levied  for  the  sake  of  revenue  only;  in  others  for  the 
purpose  of  wholly  or  partially  excluding  from  the  country 
commodities  which  the  country  can,  and  wishes,  to  produce 


PROTECTION  63 

foi-  itself.  The  effect  of  this  tax,  or  customs  duty,  is,  of 
course,  to  increase  the  natural  cost  of  the  commodities  so 
taxed,  and  protection  is  therefore  as  obnoxious  to  the  idle 
consumer  as  free  trade  is  acceptable.  It  is  true  that  the  na- 
tural cost  is  not  the  price  at  which  the  commodity  is  always 
sold,  some  nations  giving  their  exporters  a  bounty  on  some 
particular  exports  in  order  to  prevent  rival  nations  from 
establishing  or  preserving  that  particular  industry.  But 
speaking  generally,  the  consumer,  of  course,  pays  either  the 
customs  duties  or  their  equivalent;  the  equivalent  taking  the 
form  of  higher  prices — higher,  that  is,  than  he  would  have 
to  pay  if  the  duty  did  not  exist.  So  it  is  quite  clear  that 
free  trade  is  the  ideal  system  of  exchange  so  far  as  the  con- 
sumer is  concerned. 

To  the  merchant  who  buys  and  sells,  the  manufacturer 
who  produces  and  sells,  the  carrier  and  the  dealer,  free  trade 
is  likewise  preferable  to  protection,  being  more  conducive  to 
the  expansion  of  commerce.  But  to  the  manufacturer,  at 
least,  it  is  essential  that  the  free  trade  shall  be  universal, 
that  he  shall  not  be  handicapped  in  the  race  by  having  mar- 
kets closed  against  him  that  are  open  to  his  rivals.  And  if 
he  cannot  have  general  free  trade,  he  would  prefer,  with  all 
its  waste  and  restrictions,  general  protection.  Whichever  it 
is  to  be,  he  asks  that  it  shall  be  equal  all  round,  a  fair  field 
and  no  favour,  so  that  every  man  shall  obtain  such  results 
as  his  skill  and  energy  deserve. 

But  to  the  worker,  free  trade  is,  and  must  be,  most  dis- 
advantageous; for,  under  it,  the  product  of  his  labour  is  sub- 
ject to  the  competition  of  the  whole  world.  And  to  the 
worker  in  highly  civilised  and  prosperous  communities  like 
Great  Britain,  our  own  great  Colonies  and  the  United 
States  of  America,  free  trade  is,  or  would  be,  specially  dis- 
advantageous, for  the  competition  of  the  poorer  and  less 
civilised  races  of  the  earth  would  tend  inevitably  to  lower 
his  standard  of  living  down  to  theirs.  This  fact  is  clearly 
recognised  on  all  hands.  In  South  Africa  at  the  present 
moment  proposals  to  import  cheap  Asiatic  labour  are  being 
hotly    resisted   by    the    workers    there.     The    importation    of 


64  FREE  TRADE  AND 

Asiatic  labour  to  work  the  gold  mines  of  South  Africa  would 
infallibly  lower  the  standard  of  living  of  the  white  workers, 
but  it  would  be  free  trade.  The  exclusion  of  that  labour  will 
help  to  preserve  that  standard,  but  it  will  be  rank  protection. 
A  'white  Australia'  is  the  watchword  of  the  workers  in  that 
country,  and  the  organised  Labour  party  there  are  resolute 
on  the  subject.  But  it  is  a  flagrant  violation  of  free  trade 
and  the  very  incarnation  of  protection.  At  home,  amongst 
ourselves,  we  see  the  fact  recognised  every  day.  In  every 
trade  union  in  the  country  the  skilled  workers  object  to  their 
work  being  done  by  the  unskilled.  The  bricklayer  will  not 
allow  his  labourer  to  lay  a  brick,  and  in  other  trades  similar 
restrictions  prevail.  This  action,  of  which  I  entirely  approve, 
is  not  adopted  in  any  spirit  of  hostility  to  the  unskilled  work- 
man, but  simply  to  prevent  the  fall  in  wages  which  would 
inevitably  ensue,  and  which,  after  a  time,  would  reach  the 
labourer  as  well  as  the  skilled  workman.  But  to  permit  the 
labourer  to  do  skilled  work  would  be  free  trade,  and  to 
deny  him  that  permission  is  rank  protection;  yet  the  permis- 
sion is  refused  in  every  trade  union  in  the  three  kingdoms. 
In  a  word,  trade  unionism  is  protection,  as  every  candid  and 
intelligent  thinker  must  acknowledge. 

We  now  come  to  the  argument  about  producers  and  con- 
sumers, the  argument  that  is  considered  by  the  free  traders 
themselves  to  be  their  strongest  point,  especially  when  ad- 
dressing working-class  audiences.  The  argument  is  as  fol- 
lows: The  workers  are  themselves  consumers,  and,  by  my 
own  showing,  the  consumers  will  have  to  bear  the  burden  of 
any  customs  duty  that  may  be  placed  on  food  or  other  neces- 
sary commodities.  And  not  only  are  the  workers  consumers, 
but  they  are  the  majority  of  the  consumers,  and  will,  there- 
fore, have  to  bear  the  greater  part  of  the  burden.  Besides 
which,  they  are  the  poorest  section  of  the  consumers,  and, 
therefore,  the  least  able  to  bear  the  load.  This  is  the  great 
argument  of  the  free  traders — their  very  sheet-anchor.  It 
is  used  by  the  most  learned  of  them  as  well  as  by  the  most 
ignorant,  and  is  the  one  that  confuses  the  real  issue  for  the 
workers    more    frequently    and    more    efifectually    than    any 


PROTECTIOX  65 

other,  especially  when  it  is  garnished  with  the  clap-trap 
about  the  big  and  the  little  loaf.  And  I  freely  admit  that  it 
looks  and  sounds  like  a  quite  self-evident  proposition.  But 
it  is,  in  fact,  a  complete  fallacy,  as  I  will  show. 

The  interest  of  the  consumer — so  runs  the  argument — is 
a  common  interest,  and,  therefore,  must  be  paramount.  The 
nation  is  made  up  of  different  sections,  classes,  and  occupa- 
tions, each  having  its  own  sectional  and  separate  interests. 
But  all  are  consumers,  and,  the  whole  being  greater  than  the 
part,  the  interests  of  the  consumers,  as  consumers,  must  be 
preferred  before  all  others.  But  the  proposition  rests  on  the 
assumption  that  all  consumers  are  equally  interested  in  con- 
sumers' interests,  and,  as  a  matter  of  fact,  all  consumers  are 
not  equally  interested  in  consumer's  interests.  The  consum- 
ers form  two  great  divisions:  firstly,  those  who  are  consum- 
ers only,  and  secondly,  those  who  are  producers  also.  The 
members  of  the  first  of  these  divisions  are  naturally  averse 
to  any  proposals — such  as  protection  and  the  shortening  of 
the  labour  day — that  will  increase  wages  and  thereby  raise 
the  price  of  produce.  As  non-producers  (and  therefore  non- 
wage  receivers),  thej'  will  have  no  share  in  the  increased 
wages  that  will  cause  the  price  to  rise,  while,  as  consumers, 
they  will  have  to  pay  the  increased  price.  Obviously  it  is 
to  their  interest  that  price.s  should  be  kept  down  as  low  as 
possible. 

So  much  for  the  consumer  who  is  a  consumer  only  and 
not  a  producer.  As  to  the  other  consumer,  he  who  is  also  a 
producer,  his  case  is  wholly  diflferent.  He  has  two  capaci- 
ties— that  of  a  producer  and  that  of  a  consumer.  These 
capacities  are  not  only  distinct  and  separate:  they  are  direct- 
ly antagonistic  to  each  other.  They  are  antagonistic  to  each 
other  because  it  is  to  their  possessor's  interest  as  a  producer 
that  the  prices  of  products  shall  be  high,  so  as  to  afford  him 
high  wages;  while,  as  a  consumer,  it  is  to  his  interest  that 
prices  shall  be  low.  so  as  to  enable  him  to  obtain  his  com- 
modities for  a  small  outlay  of  those  wages.  This  fact,  this 
junction  in  one  person  of  mutually  antagonistic  and  un- 
equal interests,  is  the  root  of  the  whole  matter.     Confronted 


66  FREE  TRADE  AND 

with  this  problem,  it  becomes  necessary  for  the  producer  to 
ascertain  which  set  of  interests  are  most  important  to  him, 
in  order  that  he  maj^  promote  them  in  preference  to  the 
others.  And  a  brief  examination  shows  him  that  his  interest 
as  a  producer  greatly  outweighs  his  interests  as  a  consumer. 

Here  is  the  proof.  The  great  bulk  of  the  commodities 
are  consumed  by  the  non-producing  consumers.  Of  course,  I 
am  speaking  here  of  values,  not  mere  quantities.  The  fact  is 
proved  thus:  if  we  suppose  that  the  wage-receiving  workers 
spent  the  whole  of  their  income,  saving  nothing,  that  would 
be,  according  to  my  calculations,  about  400,000,000/.  an- 
nually. That,  therefore  is  the  outside  measure  of  their 
present  possible  consumption.  If  the  other  classes  did  the 
same,  that  is,  spent  the  whole  of  their  income,  their  consump- 
tion would  be  about  1,600,000,000/.,  that  being  the  amount 
of  their  income.  But,  giving  these  other  classes  the  benefit 
of  the  assumption  that  they  save  one-fourth  of  their  income — 
a  large  concession — they  still  stand  debited  with  an  annual 
consumption  of  the  value  of  1,200,000,000/.,  or  three-fourths 
of  the  whole.  And,  that  being  so,  it  is  evident  that  the 
burden  of  increased  prices  would  be  borne  to  the  extent  of 
three-fourths  by  the  non-producing  classes,  the  working 
class  bearing  one-fourth  only.  The  result,  therefore,  would 
be  that  while  the  worker  would  receive,  in  his  wages,  the 
whole  of  the  increase  of  the  prices  of  commodities,  he  would 
pay,  in  buying  his  commodities,  one-fourth  of  that  amount 
back  again,  leaving  him  a  net  balance  to  the  good  of  three- 
fourths  of  the  total  increase. 

Let  me  simplify  it  by  an  easy  illustration.  A  workman, 
say  a  baker,  is  in  receipt  of  a  weeklj-  wage  of  2Ss,  and  the 
amount  of  value  this  baker  produces  foV  this  25.?,  is,  say  4/. 
Now  let  us  suppose  that  this  4/.  takes  the  form  of  160  quar- 
tern loaves,  value  6(/.  each,  which  the  baker  turns  out  each 
week.  We  have  already  assumed  that  the  baker  spends  the 
whole  of  his  wages  everj^  week,  saving  nothing,  and,  for  con- 
venience of  illustration,  let  us  put  all  his  commodities  in  the 
form  of  the  loaves  he  himself  produces.  It  gives  us  this 
result:    160    loaves,    value    6d.    each,    total    value    4/..    produced 


PROTECTION  67 

for  a  wage  of  25^.,  with  which  255.  the  baker  buys  back  for 
his  own  sustenance  fifty  loaves.  Xow  comes  the  change.  By 
the  shortening  of  the  labour  day  and  the  consequent  scarcity 
of  labour,  the  baker  is  able,  we  will  suppose,  to  obtain  an 
increase  in  his  wage  of  100  per  cent,  bringing  it  up  to  SOs, 
per  week.  And  in  order  to  cover  this  increase  in  the  cost 
of  production,  amounting  to  2Ss.  on  160  loaves,  the  master 
baker  puts  2d.  on  each  sixpenny  loaf,  thus  raising  its  price 
to  8d.,  and  the  total  increase  on  the  160  loaves  to  26s.  Sd..  or 
IS,  8d.  more  than  the  increase  in  the  workman's  wage.  Xow, 
what  is  the  result?  The  result,  so  far  as  the  workman  is  con- 
cerned, is  that  he  now%  buying  the  same  commodities  as  be- 
fore, has  to  pay  S3^-  4d-  for  his  fifty  loaves,  instead  of  25.J. 
as  previous!}',  but  that,  on  the  other  hand,  he  receives  25.^. 
more  as  wages,  leaving  him  a  net  w^eekly  balance  to  the  good 
of  i6s.  8d.  It  is  clear,  therefore,  whatever  else  may  be 
doubtful  in  this  controversy,  that  the  interests  of  the  pro- 
ducer and  the  interests  of  the  consumer  are  diametrically 
opposed  to  each  other,  and  that  the  assertions  of  the  Cobden 
Club  economists  to  the  contrary  are  entirely  unfounded. 

In  the  foregoing  pages  I  have  endeavoured  to  show,  first- 
ly, that  the  present  condition  of  the  British  worker  is  one  of 
virtual  slavery,  and  that  that  slavery  is  the  result  of  competi- 
tion, which,  making  use  of  the  surplus  in  the  world  labour 
market  dooms  the  worker  to  a  subsistence  wage.  Secondly, 
that  that  competition  is  the  very  soul  of,  and  inseparable  from 
free  trade.  And,  thirdly,  that  it  can  only  be  overcome  by  pro- 
tective legislation  which  shall  (a)  exclude  all  foreign  labour; 
(b)  exclude  all  foreign  products  that  we  can  ourselves  pro- 
duce; and  (f)  shorten  the  labour  day,  by  law,  on  the  lines  of 
the  Factory  Acts,  to  such  a  point  that  the  labour  of  the  whole 
of  the  workers  in  the  country  will  be  necessary  for  the  sat- 
isfaction of  the  wants  of  the  community.  The  exclusions,  it 
is  self-understood,  must  apply  to  our  Colonies  and  Depen- 
dencies as  well  as  to  foreign  nations,  for  many  of  them  pos- 
sess a  superabundant  store  of  cheap  labour;  but  with  this 
difference  in  favour  of  our  Colonies,  that  we  should,  in  return 
for  corresponding  advantages  conceded  by  them  to  us,  pur- 


68  FREE  TRADE  AND 

chase  from  them,  in  preference  to  foreign  nations,  such 
products  as  we  required  and  could  not  ourselves  produce. 
This  preference  given  to  our  Colonies  would,  of  course,  have 
the  effect  of  raising  the  price  of  the  commodities  we  bought 
from  them,  for  the  competition  of  the  foreign  nations  would 
be  absent.  But  this  slight  extra  expenditure  would  be  more 
than  counterbalanced  by  the  reciprocal  concession,  from  the 
Colonies  to  us,  of  preferential  access  to  their  markets. 

North  American  Review.  150:  27-54.  January,  1890. 

Protection.*  James  G.  Blaine. 

The  physical  differences  between  the  two  countries  are 
far  more  striking  than  the  political  and  social  differences. 
They  are,  indeed,  almost  incalculable.  Great  Britain  is  an 
island  less  than  ninety  thousand  square  miles  in  extent.  It 
lies  in  the  far  north.  Its  southernmost  point  is  nearly  thirty 
degrees  of  latitude  above  the  tropics.  Its  northernmost 
point  is  but  nine  degrees  below  the  arctic  circle.  Within 
its  area  the  exchange  of  natural  products  is  necessarily  limit- 
ed. Its  life  depends  upon  its  connection  with  other  coun- 
tries. Its  prosperity  rests  upon  its  commerce  with  the 
world.  On  the  other  hand,  a  single  state  of  the  Union  is 
nearly  three  times  as  large  as  Great  Britain.  Several  other 
states  are  each  quite  equal  to  it  in  area.  The  whole  Union 
is  well-nigh  forty  times  as  large.  Alaska  excepted,  the 
northernmost  point  of  the  Union  is  sixty  miles  south  of  the 
southernmost  point  of  Great  Britain,  and  the  southernmost 
point  of  the  Union  is  but  little  more  than  a  hundred  miles 
from  the  tropics.  Its  natural  products  are  more  varied, 
more  numerous,  and  of  more  valuable  character  than  those 
of  all  Europe.  To  quote  one  of  Mr.  Gladstone's  phrases,  we 
constitute  "not  so  much  a  country  in  ourselves,  as  a  world." 
He  tells  us  that  we  carry  on  "the  business  of  domestic  ex- 
changes on  a  scale  such  as  mankind  has  never  seen."     Our 


*An    answer    to    the    article  ■  on    free    trade    by    Mr.    Gladstone, 
which  is  reprinted  in  part  on  page  107. 


PROTECTIOi\  69 

foreign  commerce,  very  large  in  itself,  is  only  as  one  to 
twenty-five  compared  to  our  internal  trade.  And  yet  Mr. 
Gladstone  thinks  that  a  policy  which  is  essential  to  an  island 
in  the  northern  ocean  should  be  adopted  as  the  policy  of  a 
country  which  even  to  his  own  vision  is  "a  world  within 
itself." 

With  these  fundamental  points  of  difference  between  the 
two  countries,  I  assume  that  varied  financial  and  industrial 
systems,  wrought  by  the  experience  of  each,  would  be  the 
natural  and  logical  result.  Hence  I  do  not  join  issue  with 
Mr.  Gladstone  on  both  of  his  propositions.  He  defends  free 
trade  in  Great  Britain.  He  assails  protection  in  the  United 
States.  The  first  proposition  I  neither  deny  nor  affirm. 
Were  I  to  assume  that  protection  is  in  all  countries  and 
imder  all  circumstances  the  wisest  policy,  I  should  be  guilty 
of  an  error  similar  to  that  Avhich  I  think  Mr.  Gladstone 
commits.  It  might  be  difficult  to  prove  that  free  trade  is 
not  the  wisest  financial  policy  for  Great  Britain.  So  far 
from  guarding  herself  against  material  imported  from  other 
countries,  her  industrial  system  would  wither  and  die  if  for- 
eign products  were  withheld  for  even  a  brief  period.  She  is 
in  an  especial  degree  dependent  upon  the  products  of  other 
nations.  Moreover,  she  does  not  feel  bound  to  pay  heed  to 
the  rate  of  wages  which  her  labor  may  receive.  That,  like 
the  fabrics  which  her  labor  creates,  must  take  its  chance  in 
the  markets  of  the  world. 

On  many  points  and  in  many  respects  it  was  far  different 
with  Great  Britain  a  hundred  years  ago.  She  did  not  then 
feel  assured  that  she  could  bear  the  competition  of  Continen- 
tal nations.  She  was,  therefore,  aggressively,  even  cruelly, 
protective.  She  manufactured  for  herself  and  for  her  net- 
work of  colonies  reaching  around  the  globe.  Into  those 
colonies  no  other  nation  could  carry  anything.  There  was 
no  scale  of  duty  upon  which  other  nations  could  enter  a 
colonial  port.  What  the  colonies  needed  outside  of  British 
products  could  be  furnished  to  them  only  in  British  ships. 
This  was  not  protection!  It  was  prohibition,  absolute  and 
remorseless,  and  it  was  continued  even  to  the  day  when  Mr. 


JO  FREE  TRADE  AND 

Gladstone  entered  upon  his  long  and  splendid  career  in 
Parliament.  It  was  not  broken,  though  in  some  respects  it 
was  relaxed,  until  in  the  fulness  of  time  British  energy  had 
carried  the  wealth  and  the  skill  of  the  kingdom  to  the  point 
where  no  competition  could  be  feared. 

During  the  last  thirty  years  of  her  protective  sj^stem,  and 
especially  during  the  twenty  years  from  1826  to  1846,  Great 
Britain  increased  her  material  wealth  beyond  ajl  precedent 
in  the  commercial  history  of  the  world.  Her  development 
of  steam  power  gave  to  every  British  workman  the  arms  of 
Briareus,  and  the  inventive  power  of  her  mechanicians  in- 
creased the  amount,  the  variety,  and  the  value  of  her  fabrics 
beyond  all  anticipation.  Every  year  of  that  period  witnessed 
the  addition  of  millions  upon  millions  of  sterling  to  the  re- 
serve capital  of  the  kingdom;  every  year  witnessed  a  great 
addition  to  the  efifective  machinery  whose  aggregate  power 
was  already  the  wonder  of  the  world.  The  onward  march 
of  her  manufacturing  industries,  the  steady  and  rapid  de- 
velopment of  her  mercantile  marine,  absorbed  the  matchless 
enterprise  and  energy  of  the  kingdom.  Finally,  with  a  vast 
capital  accumulated,  with  a  low  rate  of  interest  established, 
and  with  a  manufacturing  power  unequalled,  the  British  mer- 
chants were  ready  to  underbid  all  rivals  in  seeking  for  the 
trade  of  the  world. 

At  that  moment  Great  Britain  had  reason  to  feel  supreme- 
ly content.  She  found  under  her  own  flag,  on  the  shores 
of  every  ocean,  a  host  of  consumers  whom  no  man  might 
number.  She  had  Canada,  Australia,  and  India  with  open 
ports  and  free  markets  for  all  her  fabrics;  and,  more  than 
all  these  combined,  she  found  the  United  States  suddenly 
and  seriously  lowering  her  tariff  and  effectively  abolishing 
protection  at  the  very  moment  England  was  declaring  for 
free  trade.  The  traffic  of  the  world  seemed  prospectively  in 
her  control.  Could  this  condition  of  trade  have  continued, 
no  estimate  of  the  growth  of  England's  wealth  would  be 
possible.  Practically  it  would  have  had  no  limit.  Could 
she  have  retained  her  control  of  the  markets  of  the  United 
States  as  she  held  it  for  the  four  years  preceding  the  out- 


PROTECTION  71 

break  of  the  Civil  War,  the  American  people  would  have 
grovim  commercially  dependent  upon  her  in  a  greater  degree 
than  is  Canada  or  Australia  to-day. 

But  England  was  dealing  with  an  intelligence  equal  to 
her  own.  The  American  people  had,  by  repeated  experience, 
learned  that  the  periods  of  depression  in  home  manufactures 
were  those  in  which  England  most  prospered  in  her  com- 
mercial relations  with  the  United  States,  and  that  these 
periods  of  depression  had,  with  a  single  exception,  easily  ex- 
plained, followed  the  enactment  by  Congress  of  a  free-trade 
tariff,*  as  certainly  as  efifect  follows  cause.  One  of  the  most 
suggestive  experiments  of  that  kind  had  its  origin  in  the 
tarifif  to  which  I  have  just  referred,  passed  in  1846  in  ap- 
parent harmony  with  England's  newly-declared  financial  pol- 
icy. At  that  moment  a  Southern  President  (Mr.  Polk)  and 
a  Southern  Secretary  of  the  Treasury  (Mr.  Robert  J.  Walker) 
were  far  more  interested  in  expanding  the  area  of  slave  ter- 
ritory than  in  advancing  home  manufactures,  and  were  es- 
pecially eager  to  make  commercial  exchanges  with  Europe 
on  the  somewhat  difficult  basis  of  cotton  at  high  prices  and 
returning  fabrics  at  low  prices. 

Under  ordinary  circumstances  the  free-trade  tariff  of  1846 
would  have  promptly  fallen  under  popular  reprobation  and 
been  doomed  to  speedy  repeal.  But  it  had  a  singular  history 
and  for  a  time  was  generally  acquiesced  in,  even  attaining  in 
many  sections  a  certain  degree  of  popularity.  Never  did  any 
other  tarifif  meet  with  so  many  and  so  great  aids  of  an 
adventitious  character  to  sustain  it  as  did  this  enactment  of 
1846.  Our  war  with  Mexico  began  just  as  the  duties  were 
lowered,  and  the  consequence  was  the  disbursement  of  more 
than  one  hundred  millions  of  dollars  in  a  way  that  reached 
all  localities  and  favorably  affected  all  interests.  This  was 
a  great  sum  of  money  for  that  period,  and  for  the  years 
1846,  1847,  and  1848  it  considerably  more  than  doubled  the 
ordinary   outlay   of  the   government.     In    the   middle    of   this 


*The    phrase    "free-trade    tariff"    Involves    a    contradiction    of 

terms.      It  is  used  to   designate   that   form  of  duty  which   is   levied 
with    no   intention   to   protect   domestic    manufactures. 


72  FREE  TRADE  AND 

period  the  Irish  famine  occurred  and  called  for  an  immense 
export  of  breadstufifs  at  high  prices.  The  discovery  of  gold 
in  California,  the  succeeding  year,  flushed  the  channels  of 
business  as  never  before,  by  rapidly  enlarging  the  circula- 
tion of  coin  in  all  parts  of  the  country.  Before  this  outpour- 
ing of  gold  had  ceased,  the  three  great  nations  of  Europe,  as 
precedence  was  reckoned  at  that  time, — England,  France, 
and  Russia, — entered  upon  the  Crimean  War.  The  export  of 
manufactures  from  England  and  France  was  checked;  the 
breadstuffs  of  Russia  were  blockaded  and  could  not  reach  the 
markets  of  the  world.  An  extraordinary  stimulus  was  thus 
given  to  all  forms  of  trade  in  the  United  States.  For  ten 
years — 1846  to  1856 — these  adventitious  aids  came  in  regular 
succession  and  exerted  their  powerful  influence  upon  the 
prosperity  of  the  country. 

The  withdrawal  or  termination  of  these  influences,  by  a 
treaty  of  peace  in  Europe  and  by  the  surcease  of  gold  from 
California,  placed  the  tariff  of  1846  where  a  real  test  of  its 
merits  or  its  demerits  could  be  made.  It  was  everywhere 
asked  with  apprehension  and  anxiety,  Will  this  free-trade 
tariff  now  develop  and  sustain  the  business  of  the  country  as 
firmly  and  securely  as  it  has  been  developed  and  sustained 
by  protection?  The  answer  was  made  in  the  ensuing  year 
by  a  widespread  financial  panic,  which  involved  the  ruin  of 
thousands,  including  proportionately  as  many  in  the  South 
as  in  the  North,  leaving  the  country  disordered  and  distressed 
in  all  the  avenues  of  trade.  The  disastrous  results  of  this 
tariff  upon  the  permanent  industries  of  the  country  are 
described  in  President  Buchanan's  well-remembered  message, 
communicated  to  Congress  after  the  panic:  "With  unsur- 
passed plenty  in  all  the  elements  of  national  wealth,  our  man- 
ufacturers have  suspended,  our  public  works  are  retarded,  our 
private  enterprises  of  different  kinds  are  abandoned,  and 
thousands  of  useful  laborers  are  thrown  out  of  employment 
and  reduced  to  M^ant."  This  testimony  as  to  the  result  of  a 
free-trade  tariff  is  all  the  more  forcible  from  the  fact  that 
Mr.    Buchanan,    as   a    member   of    President    Polk's    Cabinet, 


PROTECTION  -7, 

had  consented  to  the  abandonment   of  protection,   which   in 
his  earlier  career  he  had  earnestly  supported. 

If  these  disasters  of  1857,  flowing  from  the  free-trade 
tariff,  could  have  been  regarded  as  exceptional,  if  they  had 
been  without  parallel  or  precedent,  they  might  not  have  had 
so  deadly  a  significance.  But  the  American  people  had  twice 
before  passed  through  a  similar  experience.  On  the  eve  of 
the  War  of  1812,  Congress  guarded  the  national  strength  by 
enacting  a  highly  protective  tariff.  By  its  own  terms  this 
tariff  must  end  with  the  war.  When  the  new  tariff  was  to 
be  formed,  a  popular  cry  arose  against  "war  duties,"  though 
the  country  had  prospered  under  them  despite  the  exhausting 
effect  of  the  struggle  with  Great  Britain.  But  the  prayer  of 
the  people  was  answered,  and  the  war  duties  were  dropped 
from  the  tariff  of  1816.  The  business  of  the  country  was 
speedil}^  prostrated.  The  people  were  soon  reduced  to  as 
great  distress  as  in  that  melancholy  period  between  the 
close  of  the  Revolutionary  War  and  the  organization  of  the 
National  Government — 1783  to  1789.  Colonel  Benton's  vivid 
description  of  the  period  of  depression  following  the  reduc- 
tion of  duties  comprises  in  a  few  lines  a  whole  chapter  of 
the  history  of  free  trade  in  the  United  States: 

"No  price  for  property;  no  sales  except  those  of  the  sheriff 
and  the  marshal:  no  purchasers  at  execution-sales  except  the 
creditor  or  some  hoarder  of  money;  no  employment  for  industry; 
no  demand  for  labor;  no  sale  for  the  products  of  the  farm:  no 
sound  of  the  hammer  except  that  of  the  auctioneer  knocking 
down  property.  Distress  was  the  universal  cry  of  the  people: 
relief    the    universal    demand." 

Relief  came  at  last  with  the  enactment  of  the  protective 
tariff  of  1824,  to  the  support  of  which  leading  men  of  both 
parties  patriotically  united  for  the  common  good.  That 
act,  supplemented  by  the  act  of  1828,  brought  genuine  pros- 
perity to  the  country.  The  credit  of  passing  the  two  pro- 
tective acts  was  not  due  to  one  party  alone.  It  was  the 
work  of  the  great  men  of  both  parties.  Mr.  Clay  and  Gen- 
eral Jackson,  Mr.  Webster  and  Mr.  Van  Buren,  General  Wil- 
liam Henry  Harrison  and  Richard  M.  Johnson,  Silas  Wright 
and  Louis  McLane,  voted  for  one  or  the  other  of  these  acts, 
and    several    of   them    voted    for   both.     The    cooperation    of 


74  I'REE  TRADE  AND 

these  eminent  men  is  a  great  historic  tribute  to  the  necessity 
and  value  of  protection.  Plenty  and  prosperity  followed,  as 
if  by  magic,  the  legislation  to  which  they  gave  their  sup- 
port. We  have  their  concurrent  testimony  that  the  seven 
years  preceding  the  enactment  of  the  protctive  tariff  of  1824 
were  the  most  discouraging  which  the  young  Republic  in  its 
brief  life  had  encountered,  and  that  the  seven  years  which 
followed  its  enactment  were  beyond  precedent  the  most 
prosperous  and  happy. 

Sectional  jealousy  and  partisan  zeal  could  not  endure  the 
great  development  of  manufactures  in  the  North  and  East 
which  followed  the  apparently  firm  establishment  of  the  pro- 
tective policy.  The  free-trade  leaders  of  the  South  believed — 
at  least  tliej'  persuaded  others  to  believe — that  the  manufac- 
turing states  were  prospering  at  the  expense  of  the  planting 
states.  Under  the  lead  of  Calhoun,  South  Carolina  rebelled, 
and  President  Jackson,  who  had  so  strikingly  shown  his 
faith  in  the  policy  of  protection,  was  not  able  to  resist  the 
excitement  and  resentment  which  the  Free-Traders  had 
created  in  the  cotton  states.  He  stood  between  hostile  pol- 
icies, represented  by  his  tAvo  bitterest  personal  enemies — 
Cla}'  for  protection;  Calhoun  for  free  trade.  To  support 
Clay  would  ruin  Jackson  politically  in  the  South.  He  could 
not  sustain  Calhoun,  for,  aside  from  his  opposition  to  free 
trade,  he  had  cause  for  hating  him  personally.  He  believed, 
moreover,  that  Calhoun  was  at  heart  untrue  to  the  Union, 
and  to  the  Union  Jackson  was  as  devoted  as  Clay.  Out  of 
this  strange  complication  came,  not  unnaturally,  the  sacri- 
fice of  the  protective  tariff  of  1824-28  and  the  substitution  of 
the  compromise  tariff  of  1833,  which  established  an  ad-val- 
orem duty  of  20  per  cent,  on  all  imports,  and  reduced  the 
excess  over  that  by  a  10  per  cent,  annual  sliding  scale  for 
the  ensuing  ten  years.  Eike  all  compromises,  it  gave  com- 
plete satisfaction  to  neither  party,  but  it  was  received  with 
general  acquiescence  from  the  belief  that  it  was  the  best 
practicable  solution  of  the  impending  difficulties.  The  im- 
pending difficulties  were  two.  One  was  the  portentous 
movement    which    involved    the    possibility   of   dissolving   the 


PROTECTION  75 

Union.  The  other  was  the  demand  for  a  free  trade  tariff  as 
the  only  measure  that  could  appease  the  Southern  Nullifiers. 
Disunion  and  free  trade  from  that  time  became  associated 
in  the  public  mind — a  source  of  apprehension  in  the  North,  a 
source  of  political  power  in  the  South.  Calhoun  was  the 
master-spirit  who  had  given  the  original  impulse  both  to  dis- 
union and  free  trade.  Each  in  turn  strengthened  the  other 
in  the  South  and  both  perished  together  in  the  War  of  the 
Rebellion. 

For  a  time  satisfaction  was  felt  with  the  tarifif  adjustment 
of  1833,  because  it  was  regarded  as  at  least  a  temporary  rec- 
onciliation between  two  sections  of  the  Union.  Before  the 
sliding  scale  was  ruinously  advanced,  there  was  great  stimu- 
lus to  manufacturing  and  to  trade,  which  finally  assumed  the 
form  of  dangerous  speculation.  The  years  1834,  1835.  and 
1836  were  distinguished  for  all  manner  of  business  hazard, 
and  before  the  fourth  year  opened,  the  30-per  cent,  reduction 
(three  years  of  10  per  cent,  each)  on-  the  scale  of  duties  was 
beginning  to  influence  trade  unfavorably.  The  apprehension 
of  evil  soon  became  general,  public  confidence  was  shaken, 
the  panic  of  1837  ensued,  and  business  reversals  were  rapid, 
general,  and  devastating. 

The  trouble  increased  through  1838,  1839,  and  1840,  and 
the  party  in  power,  held  responsible  for  the  financial  dis- 
asters, fell  under  popular  condemnation.  Mr.  Van  Buren 
was  defeated,  and  the  elder  General  Harrison  was  elevated 
to  the  Presidency  by  an  exceptionally  large  majority  of  the 
electoral  votes.  There  was  no  relief  to  the  people  until  the 
protective  tariff  of  1842  was  enacted;  and  then  the  beneficent 
experience  of  1824  was  repeated  on  even  a  more  extensive 
scale.  Prosperity,  wide  and  general,  was  at  once  restored. 
But  the  reinstatement  of  the  Democratic  party  to  power, 
two  years  later,  by  the  election  of  Mr.  Polk  to  the  Presi- 
dency, followed  by  a  perverse  violation  of  public  pledges  on 
the  part  of  men  in  important  places  of  administration,  led  to 
the  repeal  of  the  protective  act  and  the  substitution  of  the 
tarifif  of  1846,  to  which  I  have  already  adverted,  and  whose 
effects  upon  the  country  I  have  briefly  outlined. 


76  i-ri-:e  trade  and 

Measuring,  therefore,  from  1812,  when  a  protective  tariff 
was  enacted  to  give  strength  and  stability  to  the  govern- 
ment in  the  approaching  war  with  Great  Britain,  to  1861, 
when  a  protective  tariff  was  enacted  to  give  strength  and 
stability  to  the  government  in  the  impending  revolt  of  the 
southern  states,  we  have  fifty  years  of  suggestive  experience 
in  the  history  of  the  Republic.  During  this  long  period  free- 
trade  tariffs  were  thrice  followed  by  industrial  stagnation, 
by  financial  embarrassment,  by  distress  among  all  classes 
dependent  for  subsistence  upon  their  own  labor.  Thrice 
were  these  burdens  removed  by  the  enactment  of  a  protec- 
tive tariff.  Thrice  the  protective  tariff  promptly  led  to  in- 
dustrial activity,  to  financial  ease,  to  prosperity  among  the 
people.  And  this  happy  condition  lasted  in  each  case,  with 
no  diminution  of  its  beneficent  influence,  until  illegitimate 
political  combinations,  having  their  origin  in  personal  and 
sectional  aims,  precipitated  another  era  of  free  trade.  A 
perfectly  impartial  man,  unswerved  by  the  excitement  which 
this  question  engenders  in  popular  discussion,  might  safely 
be  asked  if  the  half-century's  experience,  with  its  three  trials 
of  both  systems,  did  not  establish  the  wisdom  of  protection 
in  the  United  States.  If  the  inductive  method  of  reasoning 
may  be  trusted,  we  certainly  have  a  logical  basis  of  conclu- 
sion in  the  facts  here  detailed. 

And  by  what  other  mode  of  reasoning  can  we  safely  pro- 
ceed in  this  field  of  controversy?  The  great  method  of 
Bacon  was  by  "rigid  and  pure  observation,  aided  by  experi- 
ment and  fructified  by  induction."  Let  us  investigate  "from 
effects  to  causes,  and  not  from  causes  to  effects."  Surely  it 
is  by  a  long  series  of  experiments,  and  by  that  test  only, 
that  any  country  can  establish  an  industrial  system  that  will 
best  aid  in  developing  its  hidden  wealth  and  establishing  its 
permanent  prosperity.  And  each  country  must  act  intelli- 
gently for  itself.  Questions  of  trade  can  no  more  be  regu- 
lated by  an  exact  science  than  crops  can  be  produced  with 
accurate  forecast.  The  unknown  quantities  are  so  many 
that  a  problem  in  trade  or  agriculture  can  never  have  an 
absolute    answ^er   in    advance.     But    Mr.    Gladstone,   with    an 


PROTECTIOX  'j'j 

apparent  confidence  in  results  as  unshaken  as  though  he 
were  dealing  with  the  science  of  numbers,  proceeds  to  demon- 
strate the  advantage  of  free  trade.  He  is  positively  certain 
in  advance  of  the  answer  which  experiment  will  give,  and 
the  inference  is  that  nothing  is  to  be  gained  by  awaiting  the 
experiment.  Mr.  Gladstone  may  argue  for  Great  Britain  as 
he  will,  but  for  the  United  States  we  must  insist  on  being 
guided  by  facts,  and  not  by  theories;  we  must  insist  on  ad- 
hering to  the  teachings  of  experiments  which  "have  been 
carried  forward  by  careful  generalization  to  well-grounded 
conclusions." 

As  an  offset  to  the  charge  that  free-trade  tariffs  have 
always  ended  in  panics  and  long  periods  of  financial  distress, 
the  advocates  of  free  trade  point  to  the  fact  that  a  financial 
panic  of  great  severity  fell  upon  the  country  in  1873,  w^hen 
the  protective  tariff  of  1861  was  in  full  force,  and  that, 
therefore,  panic  and  distress  follow  periods  of  protection  as 
well  as  periods  of  free  trade.  It  is  true  that  a  financial  panic 
occurred  in  1873,  and  its  existence  would  blunt  the  force  of 
my  argument  if  there  were  not  an  imperatively  truthful  way 
of  accounting  for  it  as  a  distinct  result  from  entirely  dis- 
tinct causes.  The  panic  of  1873  was  widely  different  in  its 
true  origin  from  those  which  I  have  been  exposing.  The 
Civil  War,  which  closed  in  1865,  had  sacrificed  on  both 
sides  a  vast  amount  of  property.  Reckoning  the  money 
directly  expended,  the  value  of  property  destroyed,  and  the 
production  arrested  and  prevented,  the  total  is  estimated  to 
be  nine  thousand  millions  of  dollars.  -  The  producers  of  the 
country  had  been  seriously  diminished  in  number.  A  half- 
million  men  had  been  killed.  A  million  more  had  been  dis- 
abled in  various  degrees.  Help  was  needed  in  the  honorable 
form  of  pensions,  and  the  aggregate  required  for  this  pur- 
pose exceeded  all  anticipation  and  has  annually  absorbed 
an  immense  proportion  of  the  national  income.  The  public 
debt  that  must  be  funded  reached  nearly  three  thousand  mil- 
lions, demanding  at  the  beginning  more  than  one  hundred 
and  fifty  millions  of  dollars  for  annual  interest.  A  great 
proportion    of   the    debt,    when    funding   was    complete,    was 


78  FREE  TRADE  AND 

held   in   Europe,   calling  for  an  enormous  export   of  gold,   or 
^  its  equivalent,  to  meet  the  interest. 

Beside  these  burdens  upon  the  people,  the  country  was 
on  a  basis  of  paper  money,  and  all  gold  payments  added  a 
heavy  premium  to  the  w^eight  of  the  obligation.  The  situa- 
tion was  without  parallel.  The  speculative  mania  which  al- 
ways accompanies  war  had  swollen  private  obligations  to  a 
perilous  extent,  and  the  important  question  arose  of  restor- 
ing coin  payment.  On  the  one  hand,  it  was  contended  that 
to  enforce  the  measure  would  create  a  panic  by  the  shrink- 
age of  prices  which  would  follow;  and  on  the  other  hand,  it 
was  urged  with  equal  zeal  that  to  postpone  it  longer  would 
increase  the  general  distrust  among  the  people  as  to  the 
real  condition  of  the  country,  and  thus  add  to  the  severity  of 
the  panic  if  one  should  be  precipitated. 

Notwithstanding  the  evil  prophecies  on  both  sides,  the 
panic  did  not  come  until  eight  and  a  half  years  after  the 
tiring  of  the  last  gun  in  the  Civil  War.  Nor  did  it  come 
until  after  two  great  calamities  in  the  years  immediately 
preceding  had  caused  the  expenditure  of  more  than  two 
hundred  millions  of  dollars,  suddenly  withdrawn  from  the 
ordinary  channels  of  business.  The  rapid  and  extensive 
rebuilding  in  Chicago  and  Boston  after  the  destructive  fires 
of  1871  and  1872  had  a  closer  connection  with  the  panic  of 
1873  than  is  commonly  thought.  Still  further,  the  six-years' 
depression,  from  1873  to  1879,  involved  individual  sufifering 
rather  than  general  distress.  The  country  as  a  whole  never 
advanced  in  wealth  more  rapidly  than  during  that  period. 
The  entire  experience  strengthened  the  belief  that  the  war 
for  the  Union  could  not  have  been  maintaind  upon  a  free- 
trade  basis,  and  that  the  panic  of  1873  only  proved  the 
strength  of  the  safeguard  which  protection  supplies  to  a 
people  surrounded  by  such  multiform  embarrassments  as 
were  the  people  of  the  United  States  during  the  few  years 
immediately  following  the  war.  And,  strongest  of  all  points, 
the  financial  distress  was  relieved  and  prosperity  restored 
under  protection,  whereas  the  ruinous  effects  of  panics  under 
free  trade  have  never  been  removed  except  by  a  resort  to 
protection. 


PROTECTION  79 

Does  'Sir.  Gladstone  maintain  that  I  am  confusing  post 
hoc  with  propter  hoc  in  these  statements?  He  must  show, 
then,  that  the  United  States  during  the  war  could  have  col- 
lected a  great  internal  revenue  on  domestic  manufactures  and 
products,  when  under  the  system  of  free  trade  similar  fabrics 
would  daily  have  reached  New  York  from  Europe  to  be  sold 
at  prices  far  below  what  the  American  manufacturer,  with 
the  heavy  excise  then  levied,  could  afford  to  set  upon  his 
goods.  And  if  the  government  could  collect  little  from  the 
customs  under  free  trade,  and  nothing  from  internal  prod- 
ucts, whence  could  have  been  derived  the  taxes  to  provide 
for  the  payment  of  interest  on  public  loans,  and  what  would 
have  become  of  the  public  credit?  Moreover,  with  free 
trade,  which  Mr.  Gladstone  holds  to  be  always  and  under  all 
circumstances  wiser  than  protection,  we  should  have  been 
compelled  to  pay  gold  coin  for  European  fabrics,  while  at 
home  and  during  the  tremendous  strain  of  the  war  legal- 
tender  paper  was  the  universal  currency.  In  other  words, 
w'hen  the  life  of  the  country  depended  upon  the  government's 
ability  to  make  its  own  notes  perform  the  function  of  money, 
the  Free-Traders'  policy  would  have  demanded  daily  gold 
for  daily  bread. 

There  is  another  important  effect  of  protective  duties 
which  Mr.  Gladstone  does  not  include  in  his  frank  admission. 
He  sees  that  the  laborers  in  what  he  calls  the  "protected 
industries"  secure  high  pay.  especially  as  compared  with  the 
European  school  of  wages.  He  perhaps  does  not  see  that 
the  effect  is  to  raise  the  wages  of  all  persons  in  the  United 
States  engaged  in  what  Mr.  Gladstone  calls  the  "unprotected 
industries."  Printers,  bricklayers,  carpenters,  and  all  others 
of  that  class  are  paid  as  high  wages  as  those  of  any  other 
trade  or  calling,  but  if  the  wages  of  all  those  in  the  protect- 
ed classes  were  suddenly  struck  down  to  the  English  stand- 
ard, the  others  must  follow.  A  million  men  cannot  be  kept 
at  work  for  half  the  pay  that  another  million  men  are  re- 
ceiving in  the  same  country.  Both  classes  must  go  up  or 
must  go  down  together. 

Mr.  Gladstone  makes  another  contention,  in  which,  from 


8o  FREE  TRADE  AND 

the  American  point  of  view,  he  leaves  out  of  sight  a  con- 
trolling factor,  and  hence  refers  an  effect  to  the  wrong 
cause.  Regarding  the  advance  of  wages  in  England,  he  says: 
"Wages  which  have  been  partially  and  relatively  higher 
under  protection  have  become  both  generally  and  absolutely 
higher,  and  greatly  higher,  under  free  trade."  I  do  not 
doubt  the  fact,  but  I  venture  to  suggest  that  such  advance  in 
wages  as  there  has  been  in  England  is  referable  to  another 
and  a  palpable  cause — namely,  the  higher  wages  in  the  Unit- 
ed States,  which  have  constantly  tempted  British  mechanics 
to"  emigrate,  and  which  would  have  tempted  many  more  if 
the  inducement  of  an  advance  in  wages  at  home  had  not 
been  interposed.  Especially  have  wages  been  high  and 
tempting  in  the  United  States  since  1861,  when  the  country 
became  firmly  protective  by  the  enactment  of  the  Morrill 
tariff.  It  will  be  found,  I  think,  that  the  advance  of  wages 
in  England  corresponds  precisely  in  time,  though  not  in 
degree,  with  the  advance  in  the  United  States,  and  the 
advance  in  both  cases  was  directly  due  to  the  firm  establish- 
ment of  protection  in  this  country  as  a  national  policy.  But 
it  must  not  be  forgotten  that  American  wages  are  still  from 
70  per  cent,  to  100  per  cent,  higher  than  British  wages.  If 
a  policy  of  free  trade  should  be  adopted  in  the  United  States, 
the  reduction  of  wages  which  would  follow  here  would 
promptly  lead  to  a  reduction  in  England.  The  operatives  of 
Manchester,  Leeds,  and  Sheffield  recognize  this  fact  as  clear- 
ly as  do  the  proprietors  who  pay  the  advanced  wages,  and 
more  clearly  than  do  certain  political  economists  who  think 
the  world  of  commerce  and  manufactures  can  be  unerringly 
directed  by  a  theory  evolved  in  a  closet  without  sufficient 
data,  and  applied  to  an  inexact  science. 

North  American  Review.  150:  740-8.  June,  1890. 

Value  of  Protection.     William  McKinley. 

We  shall  have  tariffs  so  long  as  we  have  a  government. 
We  can  only  dispense  with  them  by  resorting  to  direct  taxa- 


PROTECTIOX  8i 

tion,  and  it  is  hardly  probable  that  the  people  of  this  coun- 
try will  ever  consent  to  that  system  exclusively  for  raising 
the  needed  revenues  of  the  government.  Whatever  may  be 
our  opinions  of  either  a  "tariff  for  revenue  only"  or  a  tariff 
for  revenue  coupled  with  "protection,"  the  great  majority 
of  our  people  will  probably  always  prefer  the  one  or  the 
other  for  raising  revenue  to  taxing  directly  our  own  prod- 
ucts, our  own  industries,  and  our  own  people.  The  govern- 
ment inaugurated  the  tariff  system  in  its  first  revenue  bill, 
and  no  considerable  party  in  this  country  has  ever  sought  to 
change  it. 

In  the  discussion  of  these  theories  of  external  taxation 
we  are  prone  to  forget  that  the  one  or  the  other  is  a  neces- 
sity. No  government  can  be  administered  without  an  as- 
sured annual  income,  and  there  is  no  way  of  securing  this 
income  save  by  resorting  to  the  taxing  power  conferred  upon 
Congress  by  the  Constitution  of  the  United  States.  It  may 
be  an  evil,  but  if  so,  it  is  a  necessary  one,  and  inseparable 
from  the  existence  of  government. 

It  requires  about  $400,000,000  annually  to  meet  the  fiscal 
requirements  of  the  government.  That  is  the  condition 
which  confronts  us.  The  way  to  raise  this  money  with  the 
least  burden  upon  the  people  is  the  problem  of  the  states- 
man and  legislator.  It  would  not  do  in  time  of  peace  to 
issue  the  notes  of  the  government,  and  thus  create  a  charge 
upon  the  people,  making  no  provision  for  their  payment.  It 
would  not  do  to  restore  the  internal-revenue  system  as  it 
prevailed  through  the  war  and  for  some  years  subsequent 
thereto,  when  everything  was  taxed — every  tool  of  trade, 
every  article  of  commerce,  every  legal  document,  every 
check-  or  note  or  instrument  of  writing,  every  profession, 
every  income.  The  people  would  not  stand  that  long.  They 
bore  it  patiently  and  patriotically  under  a  great  national 
necessity.  They  bore  it  that  the  government  might  be  pre- 
served and  its  institutions  continued,  just  as  they  had  borne 
similar  taxation  at  two  other  periods  of  our  history  which 
were  similar  in  their  necessities. 

It  must  be  manifest,  therefore,  that  the  largest  share  of 


82  FREE  TRADE  AND 

the  needed  income  must  be  raised  by  tarifif  taxation  or  im- 
port duties.  Indeed,  the  predominating  sentiment  of  the 
country  is  that  the  whole  of  it  should  be  provided  in  that 
manner.  In  answer  to  this  sentiment  Congress  has,  from 
time  to  time,  been  chipping  away  the  internal-revenue  taxes; 
and  in  the  bill  now  before  the  House  it  is  proposed  to  re- 
move more  than  $10,000,000  of  these  taxes.  And  whatever 
may  be  said  of  any  other  system  of  taxation,  it  is  thoroughly 
well  understood  that  all  internal-revenue  taxes  are  paid 
directly  by  the  consumers,  and  are  a  direct  burden  upon 
our  own  people  and  their  occupations. 

In  this  situation  the  sole  question  at  issue  between  the 
two  great  political  parties  of  the  country  is  whether  our 
income  shall  be  secured  from  a  tarifif  levied  upon  foreign 
products  seeking  a  market  here,  having  in  view  revenue,  and 
revenue  only,  whether,  in  securing  this  revenue  and  impos- 
ing these  tariff's  upon  foreign  imports,  we  shall  be  mindful 
not  alone  of  the  revenue  produced  by  such  duties  and  re- 
quired for  the  government,  but  shall  see  to  it  that  duties  are 
so  levied  as  to  be  a  protection  and  defence  to  our  own  in- 
dustries against  competing  industries.  That  is  (as  we  all 
agree  to  impose  duties  upon  foreign  products),  shall  they  be 
imposed  upon  rival  foreign  products,  which  the  advocates  of 
protection  insist  shall  bear  them?  or  shall  they  be  imposed 
upon  products  that  are  not  rivals  of  our  own  and  that  do 
not  compete  with  our  own,  which  is  the  theory  and  principle 
upon  which  revenue  tarififs  are  constructed? 

If  revenue  is  the  sole  consideration,  then  the  surest  and 
most  direct  way  is  to  put  the  duty  upon  those  articles  of 
foreign  manufacture  and  production  which,  with  a  small 
and  inconsiderable  tax,  will  produce  the  largest  volume  of 
revenue;  meaning,  of  course,  those  articles  that  we  either  do 
not  produce  at  all  or  in  such  small  measure  as  to  fall  greatly 
short  of  our  domestic  wants.  This,  it  will  be  seen,  is  no  bet- 
ter than  a  system  of  direct  taxation,  no  less  onerous  than  the 
internal-revenue  system;  for  if  the  duty  is  put  upon  the  non- 
competing  foreign  products,  the  consumers  in  the  United 
States  will  pay  every   dollar  of  that  tax.  because,   as   there 


PROTECTION  83 

is  no  competition  at  home,  the  price  of  such  foreign  products 
to  the  American  consumer  will  be  the  foreign  price  with 
the  duty  added.  We  would  secure  the  revenue,  but  we  would 
pay  it  wholly  ourselves.  A  revenue  tariff  is  always  paid  by 
the  consumer.  We  would  secure  the  revenue  for  a  time, 
but,  in  placing  the  duty  upon  the  non-competing  foreign 
product,  we  would  give  no  encouragement  or  protection  to 
any  home  industry,  for  we  have  practically  none,  and  it  is 
for  this  reason  that  revenues  are  assured  with  the  smallest 
tax;  for  these  revenues  will  always  be  measured  by  the  de- 
mand of  our  people  for  such  foreign  articles  as  we  cannot 
produce  at  home,  limited  only  by  our  ability  to  buy.  I  re- 
peat, this  mode  of  taxation  is  just  as  objectionable  as  the 
most  burdensome  excise  tax. 

Is  it  not  better,  therefore,  I  submit,  that  the  income  of 
the  government  shall  be  secured  by  putting  a  tax  or  a  duty 
upon  foreign  products,  and  at  the  same  time  carefully  provid- 
ing that  such  duties  shall  be  on  products  of  foreign  growth 
and  manufacture  which  compete  with  like  products  of  home 
growth  and  manufacture,  so  that,  while  we  are  raising  all 
the  revenues  needed  by  the  government,  we  shall  do  it  with 
a  discriminating  regard  for  our  own  people,  their  products, 
and  their  employments?  Such  a  tariff  stands  as  a  defence 
to  our  own  productions,  as  a  discrimination  in  favor  of  our 
own  and  against  the  foreign,  and  as  an  encouragement  to 
productive  enterprises,  besides  securing  a  healthful  competi- 
tion not  only  among  ourselves,  but  between  ourselves  and 
foreign  producers,  tending  to  prevent  combinations  and  mon- 
opolies, and  eventuating  in  fair  and  reasonable  prices  to  our 
own  consumers.  This  is  impossible  under  the  Democratic 
revenue-tariff  system. 

Cardinal  Manning  says  in  a  recent  article: 
"If  the  great  end  of  life  were  to  multiply  yards  of  cloth  and 
cotton  twist,  and  if  the  glory  of  England  consists  or  consisted 
in  multiplying  without  stint  or  limit  these  articles  and  the 
like  at  the  lowest  possible  price,  so  as  to  undersell  all  the 
nations  of  the  world,  well,  then  let  us  go  on.  But  if  the  do- 
mestic life  of  the  people  be  vital  above  all:  if  the  peace,  the 
purity  of  homes,  the  education  of  children,  the  duties  of  wives 
and  iiiothers,  the  duties  of  husbands  and  of  fathers,  be  written 
in  the  natural  law  of  mankind,  and  if  these  things  are  sacred 
far    bevond    anythint?    that    can    be    sold    in    the    market,    then    I 


84  I-REE  TRADE  AND 

say,  if  the  hours  of  labor  resulting  from  the  unregulated  sale 
of  a  man's  strengtii  and  skill  shall  lead  to  tlie  destruction  of 
domestic  life,  to  the  neglect  of  children,  to  turning  wives  and 
motheis  into  Ii\  ing  machines,  and  of  fathers  and  husbands 
into — what  sliall  I  say,  creatures  of  burden ?~I  will  not  say  any 
other  word — who  rise  up  before  the  sun,  and  come  back  when 
it  is  set,  wearied  and  able  only  to  take  food  and  lie  down  to 
rest,  the  domestic  life  of  men  exists  no  longer,,  and  we  dare  not 
go   on    in    this   path. 

"I  will  ask,  is  it  possible  for  a  child  to  be  educated  who 
becomes  a  daily  wage-earner  at  ten  or  even  twelve  years  of 
age?  Is  it  possible  for  a  child  in  the  agricultural  districts  to 
be  educated  vi-ho  may  be  sent  out  into  the  fields  at  nine?  I 
will  ask,  can  a  woman  be  the  mother  and  head  of  a  family 
who  works  sixty  hours  a  week?  You  may  know  better  than 
I,  but  bear  with  me  if  I  say  I  do  not  understand  how  a  woman 
can  train  her  children  in  the  hours  after  they  come  home  from 
school  if  she  works  all  day  in  a  factory.  The  children  come 
home  at  4  and  5  in  the  afternoon;  there  is  no  mother  in  the 
house.  I  do  not  know  how  she  can  either  clothe  them,  or 
train  them,  or  watch  over  them,  when  her  time  is  given  to 
labor    for   sixty   hours    a    week." 

Never  was  more  truth  crowded  into  the  same  space.  It 
presents  the  situation  in  a  most  striking  manner.  If  the 
great  end  of  life  be  to  multiply  commodities  at  the  lowest 
price,  at  the  expense  of  labor,  then  the  British  system  sur- 
passes ours;  then  does  it  become  the  ideal  system,  and  the 
Democratic  party  is  wise  in  adopting  it.  But  there  are 
other  considerations  higher  and  deeper  than 'cheap  fabrics, 
when  made  so  by  the  degradation  of  human  labor.  We  must 
take  into  account  the  family  and  the  fireside.  We  must  have 
more  concern  for  the  man,  for  his  welfare,  his  improvement 
and  development,  the  enlargement  of  his  opportunities,  in- 
spiring him  to  greater  effort  in  the  confidence  of  increasing 
rewards.  These  conditions  will  ultimately  secure  cheaper 
commodities,  not  through  harsh  and  unnatural  exactions 
placed  upon  labor,  but  through  that  skill  and  craft  and  in- 
vention which  are  the  sure  outcome  of  intelligent,  thoughtful, 
independent,  and  well-paid  labor. 

The  mind  will  not  invent,  will  not  discover,  new  and  bet- 
ter and  more  economical  processes  and  methods  of  produc- 
tion, if  the  body  is  used  as  a  mere  "creature  of  burden." 
If  the  body  is  enslaved,  the  mind  cannot  be  free. 

Now.  whatever  system  will  bring  the  largest  liberty  to 
the  masses  of  our  countrymen,  the  largest  independence  to 
the  workman,  the  highest  incentive  to  manual  and  intellecttial 


PROTECTION  8s 

effort,  the  better  comforts  and  the  more  refining  environ- 
ments to  the  family,  cannot  be  dear  at  any  price.  It  must 
be  conceded  that  the  protective  system  has  accomplished 
much  in  this  direction;  certainly  more  than  any  other  system. 
It  has  dignified  and  elevated  labor;  it  has  made  all  things 
possible  to  the  man  who  works  industriously  and  cares  for 
what  he  earns;  it  has  opened  to  him  every  gateway  to  oppor- 
tunity. We  observe  its  triumphs  on  every  hand:  we  see  the 
mechanic  become  the  manufacturer,  the  workman  the  pro- 
prietor, the  employee  the  employer.  It  does  not  stifle,  but  it 
encourages,  manly  effort  and  endeavor.  Is  this  not  worth 
something?  Is  it  not  worth  everything?  Especially  in  a 
country-  like  ours,  where  the  government  is  founded  upon  the 
consent  of  the  governed,  where  citizenship  is  equal,  and 
suffrage  without  limit,  is  it  not  our  plain  duty  to  educate, 
improve,  and  elevate  our  citizenship,  which  is  indispensable 
to  the  peace  and  good  order  of  our  communities,  and  the 
permanence  of  our  institutions?  And  the  system  which  se- 
cures these  advantages  in  a  larger  degree  than  any  other, 
as  experience  has  demonstrated,  is  the  protective  system. 

The  Democratic  free-trade  Tariff-Reformers  cry  out 
against  this  system  as  narrow  and  restrictive.  The  forma- 
tion of  government  anywhere  is  narrow  and  restrictive: 
otherwise  there  would  be  no  occasion  for  separate  govern- 
ments. But  the  system  in  itself  is  neither  narrow  nor  re- 
strictive. It  is  free — freer  than  the  fiscal  system  of  any  other 
government  as  applied  to  its  own  people.  It  is  unrestrained 
throughout  forty  states  and  all  the  territories;  it  extends 
from  ocean  to  ocean.  No  other  nation  has  such  freedom  of 
international  exchange  as  ours.  No  other  peopla  have  so 
few  restraints  placed  upon  their  commerce,  their  trade,  and 
their  labor.  The  Free-Trader  wants  the  world  to  enjoy  with 
our  own  citizens  equal  benefits  of  trade  in  the  United  States. 
The  Republican  Protectionist  would  give  the  first  chances 
to  our  people,  and  would  so  levy  duties  upon  the  products 
of  other  nations  as  to  discriminate  in  favor  of  our  own. 
The  Democratic  partj-  would  make   no  distinction;   it  would 


86  FREE  TRADE  AND 

serve  the  alien  and  the  stranger:  the  Republican  party  would 
serve  the  state  and  our  own  fellow-citizens. 

Both  of  these  systems  have  been  tried  in  the  United 
States;  each  has  had  a  fair  test  and  equal  opportunity  to 
vindicate  its  value  as  a  national  policy. 

The  revenue-tariff  system  has  wholly  failed  to  give  to  the 
government  or  the  people  satisfactory  results.  It  was  not 
even  satisfactory  as  a  financial  system  in  securing  the  needed 
revenue.  It  failed  at  the  end  of  its  last  fifteen  years  of 
trial,  between  1847  and  1861,  to  furnish  sufficient  revenue 
for  the  government;  and  as  a  measure  affecting  the  develop- 
ment of  our  country  and  the  opening  up  of  its  vast  resources, 
it  was  a  failure  from  its  inauguration.  It  did  not  even  bene- 
iit  agriculture,  which  it  was  thought  it  would  greatly  stimu- 
late. The  world's  markets,  which  were  to  be  opened  up  by 
this  policy  to  our  agricultural  products,  proved  a  disappoint- 
ment to  the  authors  of  the  policy  and  disastrous  to  the  very 
interests  it  was  intended  to  promote.  It  neither  extended 
our  trade  abroad  nor  supplied  the  needed  revenue,  and  was 
positively  destructive  of  domestic  manufactures. 

Nearly  thirty  years  of  trial  of  the  system  of  protection 
with  its  marvellous  achievements  ought  to  be  answer  enough 
to  the  criticisms  of  its  enemies.  It  has  developed  our  own 
resources;  it  has  built  up  a  commerce  among  ourselves 
without  a  parallel  in  our  own  history  or  in  the  recorded 
annals  of  the  world;  while  our  trade  outside  has  been  grow- 
ing, and  was  never  so  great  or  so  satisfactory  as  it  is  to-day. 

Not  only  does  our  own  experience  commend  protection  as 
a  national  policy,  but  also  the  experience  of  the  British 
colonies  which  have  adopted  it. 

Sir  Charles  Dilke,  in  his  work  "Problems  of  Greater 
Britain," — himself  a  Free-Trader, — frankly  confesses  that  it 
is  not  easy  for  a  Free-Trader  to  give  a  perfectly  fair  state- 
ment of  the  facts  bearing  upon  colonial  protection  without 
himself  being  thought  to  be  an  apostate.  The  distinguished 
author,  in  his  earlier  work,  "Great  Britain,"  noted  the  grow- 
ing strength  of  the  doctrine  of  protection  in  the  colonies.  In 
his  new  work  he  now  adds  that 
"since    that    time    the    whole    of    the    self-governing    colonies    of 


PROTECTIOX  87 

Great  Britain,  except  New  South  Wales  and  the  Cape  (South 
Africa;,  have  become  protectionist,  while  the  Cape  has  heavy 
duties  upon  most  goods,  put  on,  however,  mainly  for  revenue 
purposes,  but  now  beginning  to  give  rise  to  a  growth  of  pro- 
tectionist opinion;  and  in  New  South  Wales  the  Free-Traders 
hold   their  own   only  by   a   bare   majority." 

Sir  Charles  further  says  that   it   cannot  be   denied  that  the 

effect  in  the  provinces  of  the  Victorian  protective  system  has 

been  to  enable  the  colony  to  gradually  supply  its  wants  with 

a   better    class    of   home-made    goods,    instead    of    importing 

them. 

Speaking  of  Canada,  he  says:  "There  can  be  but  little 
doubt  about  the  general  popularity  of  the  protective  system 
in  Canada,  and  Sir  John  Macdonald's  long  possession  of 
power  has  been  facilitated  by  his  adoption  of  the  so-called 
national  policy,"  which,  on  Sir  Charles  Dilke's  own  admis- 
sion, "'has  caused  Canadian  manuafcturers  to  win  the  greater 
portion  of  the  Canadian  market";  and  he  also  states  that 
the  wealth  of  Canada  has  been  more  rapid  since  the  adoption 
of  the  protectionist  policy  than  before. 

On  the  I2th  of  May,  1887,  in  the  Commons,  Sir  Charles 
Tupper,  in  speaking  of  a  previous  period  in  the  history  of 
Canada  under  free  trade,  said: 

"When  the  languishing  industries  of  Canada  embarrassed 
the  finance  minister  of  that  day,  when,  instead  of  large 
surplus,  large  deficits  succeeded  year  after  year,  the  opposition 
urged  upon  that  honorable  gentleman  that  he  should  endeavor 
to  give  increased  protection  to  the  industries  of  Canada,  which 
would  prevent  them  from  thus  languishing  and  being  destroyed. 
We  were  not  successful, — I  will  not  say  in  leading  the  honor- 
able gentleman  himself  to  the  conclusion  that  that  would 
be  a  sound  policy,  for  I  have  some  reason  to  believe  that  he 
had  many  a  misgiving  on  that  question, — but,  at  all  events,  we 
were  not  able  to  change  the  policy  of  the  gentleman  who  then 
ruled  the  destinies  of  Canada.  As  is  well  known,  that  became 
the  great  issue  at  the  subsequent  general  election  of  1878,  and 
the  Conservative  party  being  returned  to  power,  pledged  to 
promote  and  foster  the  industries  of  Canada  as  far  as  they  were 
able,  brought  down  a  policy  through  the  hands  of  my  honored 
predecessor.  Sir  Leonard  Tilley.  .  .  .  and  I  have  no  hesitation 
in  saying  that  the  success  of  that  policy,  thus  propounded  and 
matured  from  time  to  time,  has  been  such  as  to  command  the 
support  and  confidence  of  a  large  portion  of  the  people  of  this 
country    down   to   the   present   day." 

In  Germany,  so  long  ago  as  the  14th  of  Maj^  1882.  Bis- 
marck, in  a  speech  before  the  German  Reichstag,  paid  to 
the  Republican  tariff  high  eulogy.     He  said: 

"The  success  of  the  United  States  in  material  development 
Is   the    most   illustrious    of   modern    time.      The    American    nation 


88  FREE  TRADE  AND 


has  not  only  successfully  borne  and  suppressed  the  most  gigan- 
tic and  expensive  war  of  all  history,  but  immediately  after- 
ward disbanded  its  army,  found  employment  for  all  its  sol- 
diers and  marines,  paid  off  most  of  its  debt,  given  labor  and 
homes  to  all  the  unemployed  of  Europe  as  fast  as  they  could 
arrive  within  its  territory,  and  still  by  a  system  of  taxation 
so  indirect  as  not  to  be  perceived,  much  less  felt.  Because  it 
is  my  deliberate  judgment  that  the  prosperity  of  America  is 
mainly  due  to  its  system  of  protective  laws,  I  urge  that  Ger- 
many has  now  reached  that  point  where  it  is  necessary  to 
imitate    the   tariff    system    of   the   United    States." 

Mulhall,  the  great  London  statistician,  states  that  in  i860 
our  total  wealth  was  estimated  at  $16,000,000,000:  it  is  now 
estimated  at  over  $60,000,000,000.  In  1882- the  same  author- 
ity estimated  the  total  wealth  of  Great  Britain  at  $40,640,- 
000,000.  Mr.  Mulhall  sets  forth  our  development  and  prog- 
ress in  these  forcible  words: 

"It  would  be  impossible  to  find  in  history  a  parallel  to  the 
progress  of  the  United  States  in  the  last  ten  years.  Every  day 
that  the  sun  rises  upon  the  American  people  it  sees  an  addi- 
tion of  two  and  one-half  million  dollars  to  the  accumulation 
of  wealth  in  the  Republic,  which  is  equal  to  one-third  of  the 
daily  accumulation  of  all   mankind   outside  the  United    States." 

It  is  said  that  under  the  Republican  policy  exportations 
have  been  diminished,  and  our  foreign  trade  crippled.  This 
is  not  sustained  by  facts.  Free  trade  w^ill  not  increase  the 
exportation  of  our  products.  Exports  are  regulated  by  sup- 
ply and  demand.  Other  countries  buy  of  us  what  they 
need — no  more  and  no  less.  TarifiFs  imposed  upon  products 
coming  into  the  country  do  not  prevent  the  sending  of 
products  out  of  the  country.  They  put  no  restraint  upon 
foreign  trade.  From  Brazil,  Venezuela,  Uruguay,  and  the 
United  States  of  Colombia  we  import  to  the  value  of  $78,- 
000,000  in  round  numbers,  of  which  $72,000,000  is  free  of 
duty  at  our  ports  and  $5,815,000  is  subject  to  duty:  93  per 
cent,  comes  in  free.  We  sell  to  these  countries  a  little  over 
$19,000,000,  or  about  25  per  cent,  of  what  we  buy.  In  those 
countries  to  which  we  sell  more  than  we  buy  nearly  all  the 
products  bear  a  duty  under  our  laws. 

We  sell  to  Europe  $449,000,000  worth  of  products  and  we 
buy  $208,000,000  worth.  We  sell  to  North  America  to  the 
value  of  $9,645,000  and  buy  $5,182,000.  We  sell  to  South 
America  $13,810,000  and  buy  $9,088,000.  These  statistics  of 
the  trade  of  the  United  States  show  that  our  tariffs  do  not 


PROTECTIOX  89 

prevent  exchanges  with  countries  whose  products  compet- 
ing with  ours  are  made  dutiable,  but  evidence  a  healthy 
and  profitable  trade,  with  tlie  balance  of  exchanges  greatly 
in   our  favor. 


Nineteenth  Century.  58:  884-99.  December,  1905. 
Unemployment  and  Free  Trade.     O.  Eltzbacher. 

It  may  be  objected  that  the  foregoing  views  are  unduly 
pessimistic;  that  unemployment  is  widespread,  not  onl}'  in 
Great  Britain,  but  in  other  countries  as  well;  and  that  the 
majority  of  our  unemployed  are  out  of  work  because  they 
are  unemployable,  and  have  mostly  been  brought  down  by 
drink.     Let  us  deal  with  these  objections  one  by  one. 

As  regards  the  objection  that  employment  is  bad  not  only 
in  Great  Britain  but  in  other  countries  as  well,  I  would  give 
the  following  dry  figures,  which  should  prove  more  convinc- 
ing than  the  most  emphatic  assertion: 

PERCENTAGE  OF  UNEMPLOYED  IN  1904. 

j    January  I      April      j        July       |  October    | 
1  Percent.  (  Per  Cent.  |  Per  Cent.  |  Per  Cent,  j 


British  Trades  Unions    |         6.6         |         6.0 
German    Trades   Unionsj         1.9         |         2.1 


6.1         I         6.8 
2.1         I         2.2 


The  foregoing  figures,  which  are  taken  from  the  English 
and  German  Government  statistics,  show  that  unemployment 
was  during  1904  more  than  three  times  greater  in  this  coun- 
try than  it  was  in  Germany.  However,  as  the  accuracy  of 
these  statistics,  as  of  all  statistics,  may  be  called  into  ques- 
tion by  statisticians  and  economists  desirous  of  proving  the 
contrary,  I  would  give  the  following  extract  from  the  Frank- 
furter Zeitung    of  the   nth   of   November,    1905: 

In  October  1904  the  unfavorable  position  of  the  coal-mining 
and  the  iron  industries  affected  the  German  labour  market  un- 
favourably, and  business  in  the  textile  industries  also  was  not 
satisfactory,  so  that  it  was  feared  that  some  towns  would  suf- 
fer from  "lack  of  employment.  These  unfavourable  symptoms 
have  disappeared  in  the  course  of  the  present  year.  Whilst 
last  year  there  were  130.9  applicants  for  every  100  situations 
vacant,  there  were  in  1905  only  112.2  applicants  for  every  100 
situations  vacant.    ...   In   the  iron   and   steel   industries   the  num- 


90  FREE    TRADE   AND 

ber  of  men  employed  has  during  the  year  increased  from  month 
to  month,  and  the  autumn  has  brought  orders  which  assure 
that  the  demand  for  labour  will  continue  to  be  brisk.  In  the 
centres  of  the  machine-making  industries  business  is  very  ac- 
tive, and  the  small-iron  industry  has  rarely  been  so  fully  occu- 
pied as  during  the  present  October.  The  building  trade  also 
is  very  busy.  Business  in  the  textile  trades  has  also  increased. 
..  .  .  The  increase  of  business,  especially  in  the  harbours,  could 
be  seen  by  the  strong  demand  for  labour,  and  on  many  days 
not  enough  men  could  be  found  for  doing  the  work  at  the  Port 
of   Hamburg. 

These  facts  and  figures  are  based  on  the  most  compre- 
hensive labour  statistics  relating  to  practically  the  whole  ti 
Germany,  and  the  fact  that  the  leading  business  paper  of 
Germany  reprinted  them  assures  their  accuracy. 

A  very  good  indication  of  the  state  of  the  German  labour 
market  is  given  by  the  sale  of  stamps  under  the  Workmen's 
Insurance  Act,  for  every  workman  has  to  insure  himself 
in  proportion  to  the  wages  he  earns.  During  the  autumn 
quarter  of  1903  the  sale  of  these  stamps  brought  33,611,000 
marks;  during  the  same  period  of  1904  it  brought  35,241,000 
marks;  and  during  the  autumn  quarter  of  the  present  year 
it  brought  38,013,000  marks.  From  these  figures  it  seems 
that  employment  in  Germany  is  at  present  almost  exactly 
20  per  cent,  better  than  it  was  two  years  ago. 

"The  foregoing  facts  and  figures  prove  absolutely  that 
German  labour  is  very  fully  employed,  and  exceedingly  pros- 
perous at  the  very  time  when  the  distress  among  our  own 
unemployed  is  almost  unparalleled.  No  noticeable  unem- 
ployment exists  at  present  in  Germany. 

In  the  United  States,  also,  business  is  reported  to  be  ex- 
ceedingly good  and  labour  to  be  fully  employed;  but,  as  the 
conditions  in  the  United  States  and  in  this  country  greatly 
dififer,  it  would  perhaps  not  be  quite  fair  to  institute  a  com- 
parison. On  the  other  hand,  it  should  be  borne  in  mind  that 
the  natural  resources  of  Germany  are  so  much  inferior  to 
those  possessed  by  this  country,  that  employment  ought  to 
be  far  better  in  Great  Britain  than  in  Germany. 

Some  years  ago  the  great  Free-Trader,  Professor  Rogers, 

wrote: 

It  may  be  well  the  case,  and  there  is  every  reason  to  fear 
It  is  the  case,  that  there  is  collected  a  population  in  our  great 
towns   whose   condition   is   more   destitute,    whose   homes  are   more 


PROTECTION  91 

squalid,  whose  means  are  more  uncertain,  whose  prospects  are 
more  hopeless  than  those  of  the  poorest  serfs  of  the  Middle 
Ages   and   the   meanest    drudges   of    the   mediseval   cities. 

Unfortunatel}^,  the  condition  of  our  working  population 
has,  owing  to  the  increased  force  of  unemployment,  very- 
little,  if  at  all,  improved  since  these  words  were  written;  and 
Sir  Henry  Campbell-Bannerman  did  a  great  public  servi'ce 
when,  on  the  5th  of  June,  1903,  he  declared: 

Thanks  to  the  patience  and  accurate  scientiflc  investigations 
of  Mr.  Rowntree  and  Mr.  Charles  Booth,  we  know  that  there 
is  about  30  per  cent,  of  our  population  underfed,  on  the  verge 
of  hunger.  Thirty  per  cent,  of  41,000,000  comes  to  something 
over  12,000,000.  .  .  .  About  30  per  cent,  of  the  population  is 
living  in  the  grip  of  perpetual  poverty. 

These  facts,  unfortunately,  cannot  be  denied;  and  it  follows 
that  our  working  population,  far  from  being  prosperous  and 
happy,  is,  owing  to  the  uncertainty  and  the  insufficiency  of 
employment,  and  owing  to  consequent  low  wages,  ill  housed, 
insufficiently  clad,  and  ill  nourished. 

That  a  population  of  which  30  per  cent,  lives  'in  the  grip 
of  perpetual  poverty'  physically  deteriorates,  that  it  begets 
fewer  and  fewer  children  from  year  to  year,  and  that  it  tries 
to  drown  its  misery  in  drink,  is  only  natural.  The  continu- 
ance of  this  fearful  state  of  affairs  means  national  suicide. 
The  glaring  physical  deterioration  of  the  population,  which 
is  due  to  underfeeding;  the  terrible  decline  of  our  birth-rate, 
which  is  due  to  the  great  poverty  of  the  working  masses; 
and  the  prevalence  of  drunkenness  and  unthriftiness  among 
the  miserable  poor,  are  directly  traceable  to  the  insufficient, 
uncertain,  and  ill-paid  employment  of  our  working  popula- 
tion. That  our  prosperity  and  our  poverty  affect  our  birth- 
rate, may  easily  be  seen  from  the  fact  that  in  years  of  pros- 
perity our  population  rapidly  increases,  whilst  during  bad 
years  the  birth-rate  falls  off.  Between  1821  and  1871,  when 
Great  Britain  had  almost  the  world's  monopoly  in  manufac- 
turing, and  when  this  country  was  very  prosperous,  the  popu- 
lation of  Great  Britain,  exclusive  of  Ireland,  increased  by 
almost  100  per  cent.;  whilst  that  of  Germany,  which  then 
was  a  poor  country,  increased  by  but  50  per  cent.  Now  in- 
dustrial prosperity  has  left  Great  Britain  for  Germany,  where- 
to it  has  been  attracted  by  the  German  protective  tariffs,  and 


92  FREE  TRADE  AND 

the  position  of  the  two  countries  has  been  reversed  as  re- 
gards the  increase  of  their  population.  The  German  popu- 
lation increases  now  50  per  cent,  more  rapidly  than  does  our 
own.  Great  Britain,  after  having  had  the  highest  birth-rate 
in  Europe,  is  rapidly  drifting  towards  the  lowest;  and  this 
country,  after  having  had  the  first  rank,  occupies  now  only 
the  sixth  rank  among  European  nations  with  regard  to  the 
percentual  yearly  increase  of  population,  being  now  only 
equal  to  that  of  Spain. 

How  wretchedly  poor,  in  consequence  of  their  insufficient 
wages  and  the  instability  of  their  employment,  British  wage- 
earners  are  if  compared  with  American  and  German  workers 
is  clear  to  all  who  know  the  United  States  and  Germany.  In 
order  to  show  beyond  any  doubt  that  the  German  work- 
men— who  are  supposed  to  receive  smaller  wages  than  Eng- 
lish workers  and  to  live  on  food  quite  unfit  to  be  touched  by 
a  respectable  English  artisan — are  exceedingly  prosperous,  I 
give  the  following  figures: 


English  Savings      |      German  Savings 
Banks  Deposits       |       Banks  Deposits 


I                      £                      I  £  I 

1901  I             192,359,302             |  477,606,350  I 

1902  I             197,110,169  515,665,750  j 
Increase j £4,750,867 |  £38,059,400  | 

The  foregoing  table  shows  that  the  deposits  in  the  Ger- 
man savings  banks  are  almost  three  times  larger  than  are 
those  in  the  British  savings  banks,  and  that  the  German  de- 
posits increased  eight  times  more  rapidly  during  the  last 
year  for  which  the  German  figures  are  available  than  did  the 
British  deposits.  Besides  their  funds  in  the  savings  banks, 
the  German  working  men  have  truly  enormous  amounts 
invested  in  co-operative  societies,  building  societies,  house 
property,  &c.  During  1902  the  German  workers  received  . 
from  the  State  insurance  societies  20,762,310/.  by  way  of 
compensation.  These  few  figures  prove  that,  notwithstand- 
ing loud  assertions  to  the  contrary  which  are  based  on  in- 
sufficient knowledge,  German  workers  are  exceedingly  well 
off  and  far  more  prosperous  than  are  our  own.     Therefore 


PROTECTIOX  93 

physical  deterioration  is  absolutely  unknown  in  Germany, 
and  the  population  of  Germany  increases  at  present  by  al- 
most 1,000,000  per  annum,  whilst  our  population  barely 
grows  at  the  rate  of  400,000  per  year. 

The  cause  of  the  economic  decay  of  the  country,  and  of 
the  physical  decay  of  its  population  consequent  upon  lack 
of  employment,  is  not  far  to  seek,  and  it  is  clearly  apparent 
from  the  following  figures: 

Persons    Employed   in    the   Chief    Indl'stkies    of   the   United 

Kingdom 

Productive  Industries 

j  '■       I  I  Textile|Metals,  Machines,  Imple-1 

I  AgriculturelFishinglFabrics  |  ments  and  Conveyances  j 


1891  I     2,420,926 

1901  I     2,262,454 


65,642   11,519,8611  1,145,386 

61,925  (1,462,0011  1,475,410 


Non-productive  Industries 


|Food,  Tobacco,  Drink|Conveyance  of  men,  |Commerciall 
i  and  lodging  |Goods  and  MessageslOccupations] 


1891         I      1,113,441 
1901         !      1,301,076 


1,194,691      1   504,143 
1,497,629     I   712,465 


The  foregoing  figures  show  that  during  a  decade,  when 
our  population  has  increased  by  10  per  cent.,  the  number  of 
workers  employed  in  some  of  our  most  important  productive 
industries  has  very  seriously  declined.  It  is  true  that  at  the 
same  time  employment  in  our  non-productive  industries  has 
greatly  increased,  but  the  capability  of  our  non-productive 
industries  to  give  employment  to  additional  hands  appears  to 
be  exhausted.  After  all,  Great  Britain  can  as  little  make  a 
living  out  of  her  non-productive  industries  and  by  carting 
about  and  retailing  other  people's  goods  as  the  inhabitants 
of  an  island  in  the  South  Seas  can  subsist  on  taking  in  one 
another's  washing. 

Up  to  the  'seventies  Great  Britain  was  the  workshop  of 
the  world;  and  a  few  decades  ago,  when  our  industrial  su- 
premacy was  still  unchallenged  and  seemed  to  be  unchal- 
lengeable, Mr.  Cobden  prophesied:  'England  is,  and  ever 
will  be,  the  workshop  of  the  world.'  Unfortunately,  that 
prophecy  has  not  been  fulfilled.     Not  only  has  Great  Britain 


94  l-'REE  TRADE  AND 

ceased  to  be  the  workshop  of  the  world,  she  has  even  ceased 
to  be  her  own  workshop.  Foreign  governments,  not  satisfied 
with  having  damaged  our  export  business  by  closing  their 
countries  to  our  goods,  have  ruined  our  home  markets  also, 
and  the  British  manufacturer,  being  hard  pressed  at  home 
and  abroad,  has  to  reduce  his  stafif.  Thus  foreign  countries 
are  creating  the  unemployed  in  our  midst,  they  are  expelling 
the  population  from  this  country  in  millions,  and  are  filling 
our  workhouses  and  prisons  with  men  who  might  have  been 
respectable  citizens,  wage-earners,  and  taxpayers,  and  who 
might  never  have  fallen  so  low  had  there  been  sufficient  em- 
ployment. Napoleon  the  First  closed  the  Continent  to  our 
wares  in  time  of  war  by  his  continental  system;  but  not  a 
continental — a  universal  system  of  prohibition  has  closed  now 
almost  the  whole  world  against  our  manufactures,  and  for- 
eign nations  not  only  have  surrounded  their  countries  with 
a  high  wall  to  shut  us  out,  but  break  every  day  into  our  open 
garden  and  devastate  it  with  impunity,  since  all  protection 
has  been  withdrawn  from  the  producer,  and  since  politicians 
callously  look  on  whilst  industry  after  industry  is  being  des- 
troyed, and  whilst  million  after  million  of  our  citizens  have 
to  leave  our  stores  in  order  to  find  work  abroad. 

We  have  free  imports,  and  theoretically,  but  not  by  any 
means  in  reality,  is  living  cheap  in  this  country.  However, 
if  the  loaf  is  ever  so  cheap,  the  working  man  will  be  unable 
to  buy  it  unless  he  can  sell  his  labour.  Manufacturers  pro- 
duce not  from  philanthropy,  but  in  order  to  sell  their  goods; 
and  if  they  cannot  do  so,  they  cannot  give  employment  to 
their  men. 

Free  Trade,  we  have  been  taught,  benefits  the  consumer, 
and  to  a  limited  extent  that  is  perfectly  true.  Rich  men 
who  live  on  their  income,  who  produce  nothing,  and  who 
have  nothing  to  sell,  are  consumers  pure  and  simple,  and 
they  are  only  interested  in  buying  cheaply;  but  the  workers 
who  live  on  their  labour  cannot  'consume'  their  meal  unless 
they  have  previously  'produced'  some  work. 

The  English  consumers,  rich  and  poor,  give  out  the  work, 
but  the  work  which  might  set  Englishmen  working  is  unfor- 


PROTECTION  95 

tunately  given,  in  many  cases,  to  the  foreign  producers.  By 
this  system — which  no  doubt  is  very  scientific,  which  philo- 
sophically is  perfect,  and  which  theoretically  is  exceedingly 
beautiful — the  consumers  of  this  country  set  to  work  mil- 
lions of  foreign  workmen,  and  thus  withdraw  work  from 
this  country  and  impoverish  it  in  the  same  way  in  which  cer- 
tain absentee  landlords  impoverish  Ireland.  Our  action  is 
similar  to  that  of  a  large  landed  proprietor  in  the  country 
who  orders  from  town  everything  that  he  requires  on  his 
estate  for  his  numerous  servants  and  horses,  and  who  won- 
ders why  the  village  shops  decay.  Whilst  Englishmen  are 
starving  from  lack  of  work,  the  work  which  they  might  do 
is  given  by  the  British  consumer  to  foreign  workmen  in  the 
name  of  political  economy.  If  I  buy  a  French  motor-car 
for  500/.,  I  give  work  to  French  labour ;  and  out  of  this 
500/.,  between  300/.  and  400/.,  if  not  more,  will  be  distributed 
to  French  workers  in  the  shape  of  wages.  If  an  import 
tariff  would  shut  out  the  French  motor-car,  300/.  or  400/. 
would  go  to  English  working  men,  who  are  told  that  Free 
Trade  is  a  blessing  for  them  because  it  benefits  the  con- 
sumer. 

The  decay  of  our  agriculture  has,  during  the  last  thirty 
years,  caused  a  loss  of  national  capital  which  Mr.  Palgrave 
estimates  at  the  appalling  amount  of  1,700,000,000/..  a  sum 
which  is  twice  larger  than  our  entire  National  Debt.  When, 
through  Free  Trade,  agriculture  became  unproductive,  agri- 
cultural workers  were  discharged  by  the  hundred  thousand, 
exactly  as  now  industrial  workers  are  being  discharged.  The 
complaints  of  the  unemployed  agricultural  labourers  and  of 
the  farmers  were  met  with  the  explanation  that  other  nations 
could  produce  wheat,  meat,  &c.,  cheaper  than  we  could, 
whilst  we  could  produce  more  cheaply  manufactured  goods; 
that  Great  Britain  was  meant  to  be  the  workshop  of  the 
world,  and  that  it  would  be  good  business  if  the  foreigner 
should  send  us  cheap  food  in  exchange  for  our  manufactured 
articles.  Now  the  foreigner  has  taken  to  supply  us  not  only 
with    cheap    food,    but   with    clieap    clothes    and    cheap    furni- 


96  FREE  TRADE  AND 

ture  as  well;  and  what  do  we  give  him  in  exchange,  for   all 
imports  have  to  be  paid  for?     Our  national  capital. 

Great  Britain  used  to  be  by  far  the  richest  nation  in 
the  world,  and  her  enormous  wealth,  invested  in  new  coun- 
tries, rapidly  increased  pari  passu  with  the  progress  of 
those  countries.  A  vast  portion  of  that  invested  wealth 
has  undoubtedly  been  used  to  pay  for  the  huge  excess  of 
foreign  imports  over  exports,  and  this  is  the  reason  why 
our  national  capital  is  shrinking,  and  why  Great  Britain,  far 
from  being  the  banker  of  the  world  as  she  used  to  be,  has 
now  to  borrow  in  Paris,  New  York,  and  Berlin,  when  she 
requires  money  for  floating  a  Government  loan,  or  for  some 
large  industrial  enterprise.  In  1630,  more  than  250  years 
ago,  a  wise  English  merchant,  Mr,  Thomas  Munn,  wrote  an 
essay  entitled  Treasure  by  Forraign  Trade  or  the  Ballance  of 
our  Forraign  Trade  is  the  Rule  of  our  Treasure,  and  in  that 
curious  treatise  we  read : 

The  commonwealth  shall  decline  and  grow  poor  by  a  dis- 
order in  the  people  when  through  pride  and  other  causes  they 
do  consume  more  forraign  wares  in  value  than  the  wealth  of 
the  Kingdom  can  satisfy  and  pay  by  the  exportation  of  our 
own  commodities  which  is  the  very  quality  of  an  unthrift  who 
spends   beyond   his   means. 

Mr.  Munn  was  only  a  plain  business  man,  not  a  political 
economist,  and  consequently  his  writings  are  treated  with 
contempt  by  the  gentlemen  who  argue  on  plain  matters  of 
business  in  philosophical  abstractions  and  in  abstruse  ex- 
pressions ;  but  his  prophecy  has  unfortunately  come  only  too 
true.  N'either  an  individual  nor  a  nation  can  live  upon 
other  people's  work,  as  our  political  economists  tell  us  this 
country  does.  Those  who  tell  us  that  this  country  grows  rich 
on  'foreign  tribute'  talk  nonsense.  If  we  wish  to  bring 
back  strength,  prosperity,  and  happiness  to  Great  Britain, 
we  must  first  of  all  endeavour  to  create  sufficient  productive 
employment  for  the  nation,  and  this  we  can  easily  do  by 
shutting  out  all  foreign  goods  which  can  be  produced  by 
British  labour,  and  by  forcing  foreign  nations  to  open  their 
markets  again  to  our  manufactures  by  retaliating  if  the}^ 
shut    out    our    trade. 

We  are  told  that  it  is  the  fault  of  our  own  manufacturers 


PROTECTION  -  97 

and  workmen  if  they  cannot  successfully  compete  with  for- 
eign industries  in  this  country;  but  this  assertion  is  untrue. 
If  our  workmen  are  willing  to  accept  free  and  un- 
limited competition,  they  must  also  be  prepared  to  accept 
the  lowest  wages  paid  abroad.  This  our  workmen,  and  es- 
pecially our  organised  workmen,  refuse  to  do,  and  they  are 
right.  As  the  living  expenses  of  the  working  man  in  this 
country  are,  for  climatic  and  other  reasons,  considerably 
higher  than  in  many  other  countries — Germany  for  in- 
stance— British  workers  can  compete  on  equal  terms  with 
German  labour  only  by  accepting  starvation  wages,  suppos- 
ing international  competition  to  be  not  only  free  but  also 
strictly  fair.  However,  competition  between  British  and 
foreign  labour,  though  free,  is  not  by  any  means  strictlj' 
fair,  because  our  workers  have  with  their  produce  largely  to 
compete  with  foreign  surplus  produce  which  can  be  sold  at 
a  loss  in  this  country  and  yet  with  benefit  to  the  foreign 
manufacturer. 

As  our  political  economists  have  not  yet  discovered  that 
it  is  sometimes  exceedingly  profitable  to  sell  goods  at  a  loss, 
especially  if  they  can  be  sold  in  the  market  of  a  competitor, 
I  will  give  a  homely  illustration  of  this  seeming  paradox, 
which  will  show  the  logic  of  such  transactions.  Every  shop- 
keeper buys  more  stock  than  he  can  sell,  because  he  does 
not  want  to  be  out  of  stock  when  customers  come  to  his 
shop.  His  surplus  stock  he  periodically  sells  'at  an  alarm- 
ing sacrifice'  under  cost  price.  He  does  so  cheerfully,  and 
he  finds  it  profitable  to  sell  part  of  his  stock  at  a  loss  be- 
cause he  wants  to  turn  over  his  capital.  If  all  our  West- 
end  shopkeepers  should  combine  to  sell  all  their  surplus 
stock  at  one  certain  spot,  say  at  Hammersmith,  they  would 
easily  be  able  to  ruin  nearly  all  the  Hammersmith  shop- 
keepers, and  they  could  establish  branch  shops  of  their  own 
in  Hammersmith  after  thus  having  eliminated  their  com- 
petitors. This  is  the  process  which  is  going  on  continually 
in  this  country  owing  to  unrestricted  foreign  competition, 
and  thus,  through  Free  Trade,  our  factories  and  workmen 
are  being  eliminated. 


98  I'REE  TRADE  AND 

The  manufacturers  in  various  foreign  countries — and  es- 
pecially in  Germany,  where  they  are  united  in  powerful  and 
well-organised  combinations — agree  to  sell  their  goods  only 
at  a  certain  price  which  leaves  them  an  ample  profit  in  their 
own  country.  In  the  course  of  time  large  surplus  stocks  ac- 
cumulate, and  these  the  manufacturers  have  to  sell,  even,  if 
necessary,  at  a  loss,  because  they  must  turn  over  their 
money.  Very  sensibly  they  prefer  spoiling  our  market  in 
selling  at  a  loss  to  spoiling  their  own,  and  all  nations  favour 
Great  Britain  with  dumping  their  surplus  stock  because  we 
invite  all  to  unload  their  surplus  stock  in  this  country  by 
our  Free  Trade  system.  For  this  reason  enormous  quanti- 
ties of  foreign  goods  coming  from  all  industrial  countries 
are  sold  here  all  the  year  round  at  a  loss;  and  as  the  British 
manufacturer  cannot  possibly  furnish  the  same  goods  imder 
cost  price  in  the  ordinary  course  of  business,  he  has  to  dis- 
miss his  men,  who  join  the  unemployed,  whilst  those  who 
have  money  rejoice  at  the  cheapness  of  things.  If  our  man- 
ufacturers complain  that  the  foreigner  is  ruining  them,  and 
if  their  men  are  starving  because  they  cannot  find  employ- 
ment, our  Free-Traders,  who  mostly  belong  to  the  'con- 
sumer' class,  will  comfort  our  ruined  citizens  with  an  eco- 
nomic conundrum,  and  praise  Free  Trade  because  it  benefits 
the  consumer'  and  makes  goods  cheap.  Besides,  the  Free- 
Trader  will  loftily  tell  our  manufacturers  that  they  do  not 
understand  their  business  if  they  are  unable  to  compete 
with  foreign  manufacturers,  and  he  will  say  of  their  work- 
men that  they  are  out  of  employment  because  they  are  in- 
competent, lazy,  and  drunken.  The  tender  mercies  of  the 
Free-Traders  are  cruel. 

The  first  effect  of  Free  Trade  was  that  in  the  course  of  a 
few  decades  it  created  several  millions  of  unemployed  work- 
ers in  our  agricultural  districts,  especially  in  Ireland.  As 
then  our  manufacturing  industries  were  flourishing,  part  of 
the  discharged  agricultural  workers  found  occupation  in  the 
towns,  whilst  several  millions  of  these  men  had  to  leave  the 
country  in  order  to  find  work  in  foreign  lands  where  in- 
dustries are  protected.     At  present  Free  Trade  is  destroying 


PROTECTION  99 

our  manufacturing  industries  as  well,  and  the  exodus  of  our 
population  from  the  land  of  Free  Trade  to  protected  coun- 
tries is  becoming  greater  and  greater  from  year  to  year.  The 
Moloch  of  Free  Trade,  after  having  swallowed  up  our  coun- 
try population  and  our  agricultural  wealth,  is  now  swallow- 
ing up  our  town  population  and  our  industrial  and  invested 
wealth  as  well. 

Great  Britain  has  the  best  coal  in  the  world,  she  has 
countless  excellent  harbours  on  every  part  of  her  coast,  she 
has  the  best  workmen  in  the  world,  and  our  industrial  towns 
are  situated  so  near  to  the  sea  that  we  can  manufacture  al- 
most on  board  ship.  Coal,  iron,  harbour,  and  manufacturing 
towns,  situated  closely  together,  give  to  this  country  an 
enormous  natural  advantage  over  all  its  competitors,  the 
United  States  included.  Germany,  on  the  other  hand,  has 
inferior  coal,  she  has  but  one  good  harbour,  her  workmen, 
though  diligent  and  steady,  are  slow  and  rather  clumsy,  and, 
last  but  not  least,  her  great  manufacturing  centres  lie  from 
200  to  400  miles  inland.  Besides,  Germany  is  hampered  by 
militarism,  and  her  industries  are  handicapped  to  some  ex- 
tent by  compulsory  workmen's  insurance.  Notwithstanding 
all  these  great  disadvantages  under  which  they  labour,  the 
German  industries,  which  are  carried  on  almost  in  the  centre 
of  the  Continent,  are  exceedingly  prosperous,  whilst  ours  on 
the  seaborder  are  decaying;  we  have  permanently  almost  a 
million  unemployed  in  the  country,  whilst  Germany  has 
hardly  any  unemployed;  we  have  to  send  every  3^ear  several 
hundred  thousand  abroad,  whilst  in  Germany  immigration 
is  greater   than   emigration. 

Why  is  Germany  prosperous  notwithstanding  her  inferior 
industrial  resources,  when  at  the  same  time  Great  Britain 
with  her  incomparable  resources  is  rapidly  impoverishing? 
The  reason  is  a  simple  one.  Germany  carefully  protects  her 
industries,  whilst  Great  Britain  has  abandoned  them 
and  coldly  looks  on  whilst  foreign  nations  destroy 
one  by  one  the  sources  of  her  wealth;  Germany  care- 
fully nurses  and  develops  her  national  domain,  whilst  we 
believe  that  it  is  the  height   of  political   wisdom   to  neglect 


100  FREE  TRADE  AND 

ours  and  to  let  it  go  to  seed;  Germany's  economic  policy  is 
directed  by  experienced  business  men,  whilst  ours  is  mis- 
directed by  doctrinaires  who  have  learned  by  rote  from  a 
text-book,  which  has  been  written  by  a  professor,  some  un- 
proved economic  theories  which  are  bombastically  called 
'economic  laws,'  and  they  disdain  to  consider  economic  facts 
which  are  not  mentioned  in  the  text-book.  Unemployment, 
the  decay  of  our  national  physique,  and  many  other  evils 
which  have  sprung  from  unemployment,  have  but  one  cause — 
Free  Trade.  In  the  words  of  Bismarck,  the  body  politic 
suffers  from  Bright's  disease. 

Various  remedies  have  been  proposed  for  relieving  the 
unemployed.  Some  propose  that  the  unemployed  should  be 
occupied  in  this  country  by  creating  work  for  them,  others 
recommend  that  the  unemploj^ed  should  be  shipped  out  of 
the  country.  Both  proposals  are  impracticable.  The  coun- 
try is  not  rich  enough  to  give  adequate  relief  to  the  unem- 
ployed. They  cannot  be  settled  on  the  land  because  they 
would  not  know  how  to  work  the  land;  and  if  they  were 
taught  to  work  the  land,  they  would  be  ruined  by  Free 
Trade,  exactly  as  French  and  German  peasants  would  be 
ruined  if  American  agricultural  produce  was  freely  imported 
into  those  countries.  We  can  also  not  ship  our  unemployed 
out  of  the  country,  because  no  foreign  country  is  willing  to 
receive  a  few  millions  of  the  unemployed  with  their  families. 
We  may  help  several  thousand  of  the  unemployed,  and  we 
may  send  several  thousand  to  the  Colonies;  but  the  bulk  of 
the  unemployed  will  remain  with  us,  a  living  and  terrible 
reproach  to  this  country  and  to  those  who  are  the  champions 
of  our  present  economic  policy,  until  Protection  revives  and 
recreates  our  industries  and  enables  them  again  to  expand 
and  to  employ  more  workers. 

What  the  politician  has  spoiled,  the  politician  must  again 
set  right.  Protection  must  come,  and  will  come.  Mean- 
while, we  should  do  all  in  our  power  to  help  those  unfor- 
tunate men  who,  in  most  cases  through  no  fault  of  their 
own,  have  been  impoverished  and  who  are  suffering  especial- 
ly  during  this    severe  winter.     Let   us  also   not   forget   that 


PROTECTION  loi 

those  suffer  most  who  suffer  in  silence.  Her  Majesty  the 
Queen  has  shown  us  the  way  of  practical  charity.  Let  us 
follow  her  example  and  help  the  unemployed  according  to 
our  means. 

Outlook.  79:  432-40.  February  18,  1905. 

Should  the  Tariff  Be   Revised?     William  F.  Draper. 

The  following  figures  are  taken  from  reports  of  the  Gov- 
ernment Bureau  of  Statistics  for  the  year  ending  June,  1904, 
and  s-how  imports  of  articles  of  which  large  amounts  now 
come  from  abroad,  in  spite  of  duties.  The  list  might  be 
■  made  much  more  complete  had  I  room,  but  I  quote  only  the 
larger  importations  of  dutiable  goods,  to  illustrate  my  point: 

Manufactures     of     bronze $       754,302 

Brushes      , .  .  1,372,227 

Buttons    and    button    forms 892,612 

Cement     1,993,303 

Chemicals,    drugs,    and    dyes 24,407,444 

Clocks   and   watches 2,990,474 

Bituminous    coal     5,043,824 

Manufactures     of    cotton 49,524,426 

Earthen,    stone,    and    china   ware 12,005,008 

Manufactures    of   flax,    jute,    etc 39,221,694 

Fish     8,610,653 

Fruits    and    nuts ; 14,720.100 

Glass    and     glassware 6,367,585 

Manufactures    of    india-rubber,    etc 1,157.042 

Iron   and   steel   and   manufactures   of    26,400,022 

Jewelry    (not   including  precious   stones) 2,048,697 

Leather     4,909,231 

Manufactures     of     leather 6,190,984 

Marble   and    stone,    and    manufactures    of 1,672,374 

:Matting    and    mats 3,609,795 

Metals,    and    manufactures    of 6,334,226 

Musical     instruments     1,366.378 

Paints,    pigments,    and    colors 1.674,019 

Paper,    and    manufactures    of 5,319,086 

Manufactures    of    silk 31,973,680 

Sugar     71,919.753 

Tobacco     16,939,487 

Manufactures    of    tobacco 3.133,859 

Manufactures    of    wood    6.493,460 

"VV^ool     24,813,591 

Manufactures    of    wool    17,733,788 

Most  of  these  articles  we  ought  to  produce  ourselves,  and 

it  is  evident  that  a  reduction  of  duties,  by  making  foreign 

competing  goods  in  these  lines  cheaper,  would  either  close 

American  factories  or  force  cheaper  production  therein.    The 


102  FREE  TRADE  AND 

pressure  of  competition  now  has  driven  our  manufacturers  to 
the  greatest  economy  in  production,  consistent  with  the 
wages  paid,  and  an  enforced  cheaper  production  would 
therefore  entail  a  reduction  of  wages.  This  again  would 
diminish  our  home  market  and  lower  our  civilization  by 
bringing  our  mechanics  and  laborers  nearer  to  the  material 
condition  of  those  in  similar  vocations  abroad. 

As  a  matter  of  fact,  our  tariff,  more  than  any  other  fac- 
tor, is  responsible  for  the  maintenance  of  our  high  wage 
scale  here,  and  the  lowering  of  this  scale  permanently 
would  be  a  National  calamity,  degrading  our  labor,  diminish- 
ing our  home  market,  and  striking  at  the  very  foundation  of 
our  Republic.  I  know  that  tariff  reformers  jeer  at  this,  and. 
assert  that  the  greater  wages  of  the  mechanic  here  are  more 
than  offset  by  the  greater  cost  of  commodities.  My  space 
is  too  short  to  quote  from  Government  reports  and  other 
familiar  data  on  this  point,  but  I  will  make  a  brief  quotation 
from  John  Mitchell,  in  his  "American  and  European  Labor 
Conditions  Compared."     He  says  in  Letter  No.  12: 

Generally  speaking,  the  material  situation  of  the  American 
workingman  is  far  superior  to  that  of  his  European  brethren.  Al- 
though wages,  hours  of  labor,  and  general  conditions  of  work  are 
far  from  satisfactory  in  the  United  States,  the  situation  of  the 
American  workingman  in  these  respects  is  better  than  that  of 
the  European  workingman.  Wages,  measured  both  in  money  and 
in  wliat  money  will  buy,  are  higher  in  the  United  States  than 
in  England,  and  are  much  higher  in  the  United  States  than  In 
Germany,  France  or  Belgium.  The  working  day  appears  to  be 
slightly  longer  in  the  United  States  than  in  England,  and  some- 
what shorter  in  the  United  States  than  in  Germany,  France,  or 
Belgium. 

We  had  a  sample  of  what  tariff  revision  would  accomplish 
in  the  passage  of  the  Wilson  Law  in  1894,  after  six  months 
or  more  of  discussion  and  uncertainty.  It  is  not  necessary 
to  go  into  detail  for  the  benefit  of  those  then  of  mature  age. 
All  such  remember  the  closed  factories,  the  immense  des- 
truction of  values,  the  hundreds  of  thousands  or  millions  of 
men  desiring  work  who  could  not  find  it.  And  yet  the  Wil- 
son Law  was  only  a  moderate  reduction  from  the  McKinley 
tariff — not  as  bad,  perhaps,  as  might  be  expected  if  the  work 
were  undertaken  again. 

It  is  certain  that  if  a  reduction,  made  by  the  friends  of 


PROTECTION  103 

the  tariff,  were  any  less  radical,  the  cry  would  immediately 
go  up  from  the  independent  papers  and  tariff  reformers  for 
a  real  revision — not  a  make-believe.  Nothing  would  be  set- 
tled, and  a  partial  success  would  only  stimulate  the  outcry 
for  more. 

Referring,  however,  to  the  Wilson  reduction  or  revision 
(the  terms  are  synonymous),  I  will  state  its  effect  on  one 
business — my  own.  We  were  employing  twelve  hundred 
men  at  our  works  in  Hopedale  in  1892,  when  it  became  cer- 
tain that  a  revision  would  be  made — all  on  full  time,  and  at 
the  then  usual  standard  of  wages.  In  1894,  after  the  passage 
of  the  Wilson  Bill,  this  number  was  reduced  to  a  little  more 
than  three  hundred,  working .  three-quarters  time,  and  at 
wages  tw^enty  per  cent  less  for  the  time  employed.  It  would 
have  been  easy  to  reduce  wages  still  further,  as  we  were 
besieged  by  competent  men  willing  to  work  for  any  price 
we  would  or  could  give  them.  The  amount  of  reduction  of 
duty  on  our  product  was  only  from  forty-five  to  thirty-five 
per  cent.,  and  a  less  reduction  than  this  could  hardly  be  ex- 
pected if  our  duties  were  to  be  revised  at  all.  I  certainly  do 
not  care  for  a  repetition  of  this  experience,  and  do  not  think 
the  country  does.  It  may  be  fair  to  say  that  after  business 
became  adjusted  to  the  lower  tariff  our  force  went  up  again 
to  seven  hundred  men,  still  at  the  lower  wages,  before  the 
passage  of  the  Dingley  Law,  after  which  we  increased  to  a 
larger  force  and  higher  wages  than  ever  before.  I  antici- 
pate another  similar  experience,  not  only  for  my  industry, 
but  all  along  the  line,  if  we  again  put  the  same  causes  into 
operation. 


Minneapolis  Journal,  September,  1908. 

Indirect  Protection  for  England. 

The  argument  for  free  trade  would  be  perforce  purely 
academic,  were  it  not  for  the  illustration  afforded  doctrinaire 
free-traders  bj^  the  example  of  free-trade  England. 

That    England,  by   virtue   of  her  unique  commercial   and 


I04  FREE  TRADE  AND 

hnancial  position,  was  secretly  protected,  despite  her  otifiicial 
standing  as  a  free-trade  countrj^  has  long  been  suspected. 
Being  the  great  sea  carrier  of  the  world,  and  monopolizing 
the  business  of  insurance  upon  ships  and  the  cargoes  of  the 
commerce  of  the  world,  she  did  not  suffer  the  penalties  of 
free  trade  as  Germany,  or  France,  or  America  would  have 
done,  and  was  virtually  protected  by  means  of  many  restric- 
tions imposed  through  shipping  regulations  and  the  like. 

Levy  Mayer,  a  prominent  Chicago  lawyer,  who  has  re- 
turned from  a  summer  spent  in  Europe,  tells  us  a  shrewd 
English  plan  to  protect  English  interests.  Mr.  Mayer  is 
immensely  impressed  with  the  protective  potentiality  of  the 
new  English  patent  law. 

In  his  own  words:  "The  new  patent  laws  of  England 
have  done  much  to  revive  certain  industries  and  to  establish 
others  in  that  country.  Under  those  laws  foreign  inventors 
cannot  avail  themselves  of  English  protection  unless  the 
inventions  are  manufactured  in  England.  The  result  of  this 
has  already  been  to  compel  the  greatest  of  foreign  corpora- 
tions, particularly  American  ones,  controlling  successful  in- 
ventions, to  establish  great  manufacturing  plants  in  Eng- 
land. A  London  financier  and  economist  of  international 
reputation,  told  me  that  in  his  opinion  the  law  would  require 
the  use  and  expenditure  for  plants,  materials,  and  labor  of 
at  least  $125,000,000  a  year." 

Which  is  a  subtle  form  of  protection,  it  is  true,  but  a 
protection  quite  as  decided  as  the  protection  afforded  by 
tariffs.  And  England  has  always  by  ships,  or  through  in- 
surance, been  keen  to  protect  her  capital  at  least,  although 
she  has  been  somewhat  neglectful  in  protecting  her  labor, 
with  the  result  of  having  a  chronic  "unemployed"  problem 
on  her  hands. 

But  England's  position  is  changing,  or  has  changed. 
She  no  longer  has  a  monopoly  in  manufacturing,  and  even 
her  commercial  supremacy  upon  the  sea  is  disputed.  Once 
her  peculiar  advantages  protected  her.  Now  she  is  feeling 
the  need  of  having  protection,  such  as  other  nations  em- 
ploy  to    sustain    their   home   markets    and   to    increase    their 


i 


PROTECTIOX  105 

markets  abroad.  The  liberal  party  is  still  averse  to  the  pro- 
tection policy  of  Joseph  Chamberlain,  but  it  is  not  above 
seeking  and  securing  indirect  protection  through  the  agency 
of  such  legislation  as  these  new  patent  laws. 

Free  trade  is  an  obsolete  doctrine.  Soon  no  great  nation 
but  will  have  become  a  protectionist  nation,  if  for  no  other 
reason  than  for  that  of  being  able  to  wage  the  wars  which, 
as  the  late  Lord  Salisbury  observed,  are  to  be  conducted  in 
the  future  by  means  of  tariffs  instead  of  armies. 


NEGATIVE  DISCUSSION 

North  American  Review.  150:  1-27.  January,  1890. 

Free  Trade.     William  E.  Gladstone. 

/.  Apology  for  This  Article. 

The  existing  difference  of  practice  between  America  and 
Britain  with  respect  to  free  trade  and  protection  of  necessity 
gives  rise  to  a  kind  of  international  controversy  on  their  re- 
spective merits. 

I  thought,  and  each  of  the  rolling  years  teaches  me  more 
and  more  fixedly  to  think,  that  in  international  transactions 
the  British  nation  for  the  present  enjoj^s  a  commercial 
primacy;  that  no  country  in  the  world  shows  any  capacity  to 
wrest  it  from  us,  except  it  be  America;  that,  if  America  shall 
frankly  adopt  and  steadily  maintain  a  system  of  free  trade, 
she  will  by  degrees,  perhaps  not  slow  degrees,  outstrip  us 
in  the  race,  and  will  probably  take  the  place  which  at  pres- 
ent belongs  to  us;  but  that  she  will  not  injure  us  b}'^  the  opera- 
tion. On  the  contrary,  she  will  do  us  good.  Her  freedom  of 
trade  will  add  to  our  present  commerce  and  our  present 
wealth,  so  that  we  shall  be  better  than  we  now  are.  But 
rt^hile  we  obtain  this  increment,  she  will  obtain  another  in- 
crement, so  much  larger  than  ours  that  it  will  both  cover  the 
minus  quantity  which,  as  compared  with  us,  she  at  present 
exhibits  in  international  transactions,  and  also  establish  a 
positive  excess,  possibly  a  large  excess,  in  her  own  favor. 

//.  An   Old  Friend   With  a  New  Face 

The  protective  argument,  however,  at  this  stage  rather  is. 
How  can  the  capitalist  engaged  in  manufacture  compete 
with  his   British  rival,   who   obtains  labor  at  half  the   price? 


io8  FREE  TRADE  AND 

But  this  also  is  to  us  neither  more  nor  less  than  the  repeti- 
tion of  an  old  and  familiar  strain.  The  argument  is  so 
plausible  that,  in  the  early  days  of  our  wellknown  Corn-Law 
controversy,  it  commended  itself  even  to  some  of  the  first 
champions  of  Repeal.  They  pointed  out  that  during  the 
great  French  war  the  trade  of  our  manufacturers  was  se- 
cured by  our  possession  of  the  sea;  but  that,  when,  by  the 
establishment  of  peace,  that  became  an  open  highway,  it 
was  impossible  for  our  manufacturers,  who  had  to  pay  their 
workmen  wages  based  upon  protection  prices  for  bread  as 
the  first  necessary  of  life,  any  longer  to  compete  with  the 
cheap  bread  and  cheap  labor  of  the  continent.  And,  in  truth, 
they  could  show  that  their  trade  was  at  the  time,  to  a  great 
extent,  either  stationary  or  even  receding.  These  arguments 
were  made  among  us,  in  the  alleged  interest  of  labor  and  of 
capital,  just  as  they  are  now  employed  by  you;  for  America 
may  at  present  be  said  to  diet  on  the  cast-off  reasonings  of 
English  protectionism.  They  were  so  specious  that  thej' 
held  the  field  until  the  genius  of  Cobden  recalled  us  from 
conventional  phrases  to  natural  laws,  and  until  a  series  of 
bad  harvests  (about  1838-41)  had  shown  the  British  work- 
man that  what  enhanced  the  price  of  his  bread  had  no  cor- 
responding power  to  raise  the  rate  of  his  wages,  but  distinct- 
ly tended  to  depress  them. 

Let  me  now  mark  the  exact  point  to  which  we  have 
advanced.  Like  a  phonograph  of  Mr.  Edison,  the  American 
Protectionist  simply  repeats  on  his  side  of  the  Atlantic  what 
has  been  first  and  often,  and  long  ago,  said  on  ours.  Under 
protection  our  wages  were,  on  the  whole,  higher  than  those 
of  the  Continent.  Under  protection  American  wages  are 
higher  than  those  of  Great  Britain.  We  then  argued,  post 
hoc.  ergo  propter  hoc.  He  now  argues  (just  listen  to  his 
phonograph),  post  hoc.  ergo  propter  hoc.  But  our  expe- 
rience has  proceeded  a  stage  further  than  that  of  the  Amer- 
ican people.  Despite  the  low  wages  of  the  Continent,  we 
broke  down  every  protective  wall  and  flooded  the  country 
(so  the  phrase  then  ran)  with  the  corn  and  the  commodities 
of  the  whole  world;  with  the  corn  of  America  first  and  fore- 


Jl 


PROTECTIOX  109 

most.  But  did  our  rates  of  wages  thereupon  sink  to  the 
level  of  the  Continent?  Or  did  it  rise  steadily  and  rapidly 
to  a  point  higher  than  had  been  ever  known  before? 

That  the  American  rate  of  wages  is  higher  than  ours  I 
concede.  Some,  at  least,  of  the  causes  of  this  most  gratify- 
ing fact  I  shall  endeavor  to  acknowledge.  My  enumeration 
may  be  sufficient  or  may  be  otherwise.  Whether  it  be  ex- 
haustive or  not,  the  facts  will  of  themselves  tend  to  lay 
upon  protectionism  the  burden  of  establishing,  by  something 
more  than  mere  concomitancy,  a  causal  relation  between 
commercial  restraint  and  wages  relatively  high.  But  what  if, 
besides  doing  this,  I  show  (and  it  is  easy)  that  wages  which 
may  have  been  partially  and  relatively  high  under  protection, 
have  become  both  generally  and  absolutely  higher,  and  great- 
ly higher,  under  free  trade? 

That  protection  may  coexist  with  high  wages,  that  it  may 
not  of  itself  neutralize  all  the  gifts  and  favors  of  nature,  that 
it  does  not  as  a  matter  of  course  make  a  rich  country  into  a 
poor  one — all  this  may  be  true,  but  it  is  nothing  to  the  point. 
The  true  question  is  whether  protection  offers  us  the  way  to 
the  maximum  of  attainable  wage.  This  can  only  be  done  by 
raising  to  the  utmost  attainable  height  the  fund  out  of  which 
wages  and  profits  alike  are  drawn.  If  its  tendency  is  not  to 
increase,  but  to  diminish,  that  fund,  then  protection  is  a 
bar  to  high  wages,  not  their  cause;  and  is,  therefore,  the 
enemy,  not  the  friend,  of  the  classes  on  whose  wages  their 
livelihood  depends.  This  is  a  first  outline  of  the  propositions 
which  I  shall  endeavor  to  unfold  and  to  bring  home. 

///.   British    Wages 

Mr.  McKay  greatly  relied  upon  a  representation  which 
he  has  given  as  to  the  rate  of  wages  in  England.  It  is  only 
incidental  to  the  main  discussion,  for  the  subject  of  this 
paper  is  not  England,  but  America;  Yet  it  evidently  requires 
to  be  dealt  with;  and  I  shall  deal  with  it  broadly,  though 
briefly,  asking  leave  to  contest  alike  the  inferences  and  the 
facts  which  he  presents.  My  contention  on  this  head  will  be 
two-fold.     First,  he  has  been  misled  as  to  the  actual  rate  of 


no  FREE  TRADE  AND 

wages  in  England.  Secondly,  the  question  is  not  whether 
that  rate  is  lower  than  the  rate  in  America,  nor  even  whether 
the  American  workman  (and  this  is  a  very  different  matter) 
is  always  better  off  than  the  workman  in  England.  It  is, 
What  are  English  wages  now  under  free  trade,  compared 
with  what  they  formerly  were  under  protection? 

We  must  endeavor  to  ascertain  the  general  rate  of  wages 
now,  in  comparison  with  what  it  was  under  the  protective 
system,  and  with  constant  regard  to  the  cost  of  living  as  ex- 
hibited by  the  prices  of  commodities. 

And,  in  order  to  try  the  question  for  this  country  at  large, 
whether  free  trade  has  been  a  curse  or  a  blessing  to  the 
people  who  inhabit  it,  I  shall  repair  at  once  to  our  highest 
authority,  Mr.  Giffen,  of  the  Board  of  Trade,  whose  careful 
and  comprehensive  disquisitions  are  before  the  world,  and 
are  known  to  command,  in  a  very  high  degree,  the  public 
confidence.  He  supplies  us  with  tables*  which  compare  the 
wages  of  1833  with  those  of  1883  in  such  a  way  as  to  speak 
for  the  principal  branches  of  industry,  with  the  exception  of 
agricultural  labor.  The  wages  of  miners,  we  learn,  have 
increased  in  Staffordshire  (which  almost  certainly  is  the 
mining  district  of  lowest  increment)  by  50  per  cent.  In  the 
great  exportable  manufactures  of  Bradford  and  Hudders- 
field,  the  lowest  augmentations  are  20  and  30  per  cent.,  and 
in  other  branches  they  rise  to  50,  83,  100,  and  even  to  150 
and  160  per  cent.  The  quasi-domestic  trades  of  carpenters, 
bricklayers,  and  masons,  in  the  great  marts  of  Glasgow  and 
Manchester,  show  a  mean  increase  of  63  per  cent,  for  the 
first,  65  per  cent,  for  the  second,  and  47  per  cent,  for  the 
third.  The  lowest  weekly  wage  named  for  an  adult  is 
twenty-two  shillings  (as  against  seventeen  shillings  in  1833), 
and  the  highest  thirty-six  shillings.  But  it  is  the  relative 
rate  with  which  we  have  to  do;  and,  as  the  American  writer 
appears  to  contemplate  with  a  peculiar  dread  the  effect  of 
free  trade  upon  shipping,  I  further  quote  Mr.  Giffen  on  the 
monthly   wages  of   seament   in   1833   and   1883   in  Bristol,   Glas- 


*  Progress  of  the  Working  Classes  During  the   Last  Half  Cen- 
tury:  in  "Essays  on  Finance."     London.     1886.     P.   372.     tP.   373. 


i 


PROTFXTION  III 

gow,  Liverpool,  and  London.  The  percentage  of  increase, 
since  we  have  passed  from  the  protective  system  of  the 
Navigation  Law  into  free  trade,  is  in  Bristol  66  per  cent.,  in 
Glasgow  55  per  cent.,  in  Liverpool  (for  different  classes) 
from  25  per  cent,  to  70  per  cent.,  and  in  London  from  45 
per  cent,  to  69  per  cent.  Mr.  Gififen  has  given  the  figures  in 
all  the  cases  where  he  could  be  sufificiently  certain  of  exact- 
itude. No  such  return,  at  once  exact  and  comprehensive, 
can  be  supplied  in  the  case  of  the  rural  workman.  But  here 
the  facts  are  notorious.  We  are  assured  that  there  has  been 
an  universal  rise  (somewhat  checked,  I  fear,  by  the  recent 
agricultural  distress),  which  Caird  and  other  authorities  place 
at  60  per  cent.f  Mr.  Giffen  apparently  concurs;  and,  so  far 
as  my  own  personal  sphere  of  observation  reaches,  I  can 
with  confidence  confirm  the  estimate  and  declare  it  to  be 
moderate.  Together  with  this  increase  of  pay  there  has 
been  a  general  diminution  of  the  hours  of  work,  which  Mr. 
Gififen  places  at  one-fifth. t  If  we  make  this  correction  upon 
the  comparative  table,  we  shall  find  that  the  cases  are  very 
few  in  which  the  increment  does  not  range  as  high  as  from 
50  and  towards   100  per  cent. 

In  a  later  essay,  of  January,  i886,§  Mr.  Giffen  touches 
the  case  of  the  unskilled  laborer.  He  observes  that  the  ag- 
gregate proportion  of  unskilled  to  skilled  labor  has  dimin- 
ished— a  fact  which  of  itself  forcibly  exhibits  the  advance  of 
the  laboring  population  as  a  whole.  I  will  not  enter  upon 
details;  but  his  general  conclusion  is  this:  the  improvement 
is  from  70  to  90  per  cent,  in  the  wages  of  unskilled  non- 
agricultural  labor.  And  again,  comparing  the  laborer  with 
the  capitalist  between  1843  and  1883,  he  estimates  that,  while 
the  income  from  capital  has  risen  in  this  country  from  190 
to  400  millions,  or  by  210  per  cent.,  the  working-class  in- 
come, below  the  standard  which  entails  liability  to  income- 
tax,  has  risen  from  235  millions  to  620,  or  at  the  rate  of  160 
per  cent.  Within  the  same  period  the  prices  of  the  main 
articles  of  popular  consumption  have  not  increased,  but  have 


P.    575.    t  Ibid.    §  Pp.    424,  425. 


112  FREE  TRADE  AND 

certainly  declined.*  The  laborer's  charges,  except  for  his 
abode,  have  actually  diminished  as  a  whole.  For  his  larger 
house-rent  he  had  a  better  house.  To  the  government  he 
pays  much  less  than  he  did,  and  from  the  government  he 
gets  much  more;  and  "the  increase  of  his  money  wages  cor- 
responds to  a  real  gain."t 

Such,  then,  have  been  the  economical  results  of  free  trade 
as  compared  with  protection.  Of  its  political,  moral,  and 
social  results,  at  least  so  far  as  they  regard  the  masses  of 
the  people,  an  account  in  no  way  less  satisfactory  could  be 
given,  were  this  the  proper  occasion  for  entering  on  the 
subject.  If  it  be  said  that  the  tale  I  have  told  is  insufficient, 
and  that  wages  ought  still  to  rise,  this  may  be  so;  and  rise  I 
hope  they  will;  but  protection  had  no  such  tale  to  tell  at  all. 
For  the  working  population  at  large  it  meant  stagnation, 
depression,  in  many  cases  actual  and  daily  hunger  and 
thirst,  in  some  unquestionable  and  even  gross  degradation. 
I  will  venture  to  say  that,  taking  the  case  as  a  whole,  it 
would  be  difficult  to  match  in  history  the  picture  which  Great 
Britain  now  presents  of  progress,  achieved  mainly  through 
wise  laws,  from  stinted  means  and  positive  want  towards 
comfort  and  abundance  for  the  pepole. 

/F.   Protection    Vieived  in  Its  First  Aspects 

With  a  view  to  presenting  the  argument  for  leaving  trade 
to  the  operation  of  natural  laws  in  the  simplest  manner,  I 
shall  begin  with  some  postulates  which  I  suppose  to  be  in- 
capable of  dispute. 

International  commerce  is  based,  not  upon  arbitrary  or 
fanciful  considerations,  but  upon  the  unequal  distribution 
among  men  and  regions  of  aptitudes  to  produce  the  several 
commodities  which  are  necessary  or  useful  for  the  susten- 
ance, comfort,  and  advantage  of  human  life. 

If  every  country  produced  all  commodities  with  exactly 
the  same  degree  of  facility  or  cheapness,  it  would  be  con- 
trary to  common-sense  to  incur  the  charge  of  sending  them 
from  one  country  to  another. 


*  P.  405.    t  PP,    332,  333. 


PROTECTION  113 

But  the  inequalities  are  so  great  that  (for  example) 
region  A  can  supply  region  B  with  many  articles  of  food, 
and  region  B  can  in  return  supply  region  A  with  many 
articles  of  clothing,  at  such  rates  that,  although  in  each  case 
the  charge  of  transmission  has  of  necessity  been  added  to 
the  first  cost,  the  respective  articles  can  be  sold  after  im- 
portation at  a  lower  rate  than  if  they  were  home-grown  or 
home-manufactured  in  the  one  or  the  other  country  respec- 
tively. 

The  relative  cost,  in  each  case,  of  production  and  trans- 
mission, as  compared  with  domestic  production,  supplies, 
while  all  remain  untrammelled  by  state  law,  a  rule,  motive, 
or  mainspring  of  distribution  which  may  be  termed  natural. 

The  argument  of  the  Free-Trader  is  that  the  legislator 
ought  never  to  interfere,  or  only  to  interfere  so  far  as  im- 
perative fiscal  necessity  may  require  it,  with  this  natural  law 
of  distribution. 

All  interference  with  it  by  a  government  in  order  to  en- 
courage some  dearer  method  of  production  at  home,  in 
preference  to  a  cheaper  method  of  production  abroad,  may 
fairly  be  termed  artificial.  And  every  such  interference 
means  simply  a  diminution  of  the  national  wealth.  If  region 
A  grows  corn  at  home  for  fifty  shillings  with  -wihich  region 
B  can  supply  it  at  forty,  and  region  B  manufactures  cloth  at 
twenty  shillings  with  which  region  A  can  supply  it  at  fifteen, 
the  national  wealth  of  each  is  diminished  by  the  ten  and  five 
shillings  respectively. 

And  the  capitalists  and  laborers  in  each  of  these  countries 
have  so  much  the  less  to  divide  into  their  respective  shares, 
in  that  competition  between  capital  and  labor  which  deter- 
mines the  distribution  between  them  of  the  price  brought  in 
the  market  by  commodities. 

In  my  view,  and  I  may  say  for  my  countrymen  in  our 
view,  protection,  however  dignified  by  the  source  from  which 
it  proceeds,  is  essentially  an  invitation  to  waste,  promulgated 
with  the  authority  of  law.  It  may  be  more  violent  and  pro- 
hibitory, or  it  may  be  less;  but,  up  to  the  point  to  which  it 
goes,  it  is  a  promise  given   to  dear  production   to   shield   it 


114  FREE  TRADE  AND 

against  the  competition  of  cheap  production,  or  given  to 
dearer  production  to  hold  it  harmless  against  cheaper;  to 
secure  for  it  a  market  it  could  not  otherwise  hold,  and  to 
enable  it  to  exact  from  the  consumer,  a  price  which  he  would 
not  otherwise  pay. 

Protection  says  to  a  producer,  Grow  this  or  manufacture 
that  at  a  greater  necessary  outlay,  though  we  might  obtain 
it  more  cheaply  from  abroad,  where  it  can  be  produced  at  a 
smaller  necessary  outlay.  This  is  saying,  in  other  words, 
waste  a  certain  amount  of  labor  and  of  capital;  and  do  not  be 
afraid,  for  the  cost  of  your  waste  shall  be  laid  on  the  should- 
ers of  a  nation  which  is  well  able  to  bear  it.  So  much  for 
the  waste  unavoidably  attaching  to  dearness  of  production. 
But  there  are  other  and  yet  worse  descriptions  of  waste,  as 
to  which  I  know  not  whether  America  suffers  greatly  from 
them,  but  I  know  that  in  this  country  we  suffered  from  them 
grievously  under  the  sway  of  protection.  When  the  barrier 
erected  by  a  protective  duty  is  so  high  that  no  foreigner  can 
overleap  it,  that  duty  enables  the  home  manufacturer  not 
only  to  charge  a  high  price,  but  to  force  on  the  consumer  a 
bad  article.  Thus,  with  an  extravagant  duty  on  foreign 
corks,  we  had  for  our  own  use  the  worst  corks  in  Europe. 
And  yet  again,  protection  causes  waste  of  another  kind  in  a 
large  class  of  cases.  Suppose  the  natural  disadvantages  of 
the  home  producer  to  equal  15  per  cent.,  but  the  protective 
duty  to  be  30.  But  cheapness  requires  minute  care,  economy, 
and  despatch  at  all  the  stages  through  which  production  has 
to  pass.  This  minute  care  and  thrift  depend  mainly  on  the 
pressure  of  competition.  There  were  among  us,  and  there 
may  be  elsewhere,  many  producers  whom  indolence  tempts 
to  neglect;  who  are  not  sufficiently  drawn  to  resist  this 
inertia  by  the  attraction  of  raising  profit  to  a  maximum ;  for 
whom  the  prospect  of  advantage  is  not  enough  without  the 
sense  of  necessity,  and  whom  nothing  can  spur  to  a  due 
nimbleness  of  movement  except  the  fear  of  not  being  able  to 
sell  their  articles.  In  the  case  I  have  supposed,  the  second 
15  per  cent,  is  a  free  margin  whereupon  this  indolence  may 
disport   itself:    the   home   producer   is    not   only   covered   for 


PROTECTIOX  115 

what  he  wastes  through  necessity.  l)ut  for  what  he  wastes 
from  negligence  or  choice;  and  his  fellow-countrymen,  the 
public,  have  to  pay  alike  for  both.  We  suffered  grievously 
from  this  in  England,  for  oftentimes  the  rule  of  the  producer 
is,  or  was,  to  produce  not  as  well  as  he  can,  but  as  badly 
as  he  can,  and  as  well  only  as  he  must.  And  happy  are  you 
if,  through  keener  energy  or  more  troublesome  conscience  in 
production,  you  have  no  similar  suflfering  in  America. 

If  protection  could  be  equably  distributed  all  round,  then 
it  would  be  fair  as  between  class  and  class.  But  it  cannot 
possibly  be  thus  distributed  in  an}-  country  until  we  have  dis- 
covered a  country  which  will  not  find  its  interest  in  export- 
ing some  commodity  or  other.  For  the  price  of  that  com- 
modity at  home  must  be  determined  by  its  price  in  foreign 
or  unprotected  markets,  and  therefore,  even  if  protective 
duties  are  inscribed  on  the  statute-book  at  home,  their  effect 
must  remain  absolutely  null,  so  far  as  this  particular  article 
is  concerned.  It  is  beyond  human  wit  and  power  to  secure 
to  the  cotton-grower,  or  to  the  grower  of  wheat  or  maize  in 
the  United  States,  the  tenth  part  of  a  cent  per  bale  or  per 
bushel  beyond  what  the  price  in  the  markets  of  export  will 
allow  to  him.  If,  under  these  circumstances,  he  is  required 
to  pay  to  the  iron-master  of  Pennsylvania,  or  to  the  manu- 
facturer at  Lowell,  an  extra  price  on  his  implements  or  on 
his  clothing,  for  which  he  can  receive  no  compensation  what- 
ever, such  extra  price  is  at  first  sight  much  like  robberj^  per- 
petrated by  law. 

If  such  be  the  ugly  physiognomj'  presented,  at  the  present 
stage  of  our  inquiry,  by  this  ancient  and  hoary-headed  wiz- 
ard in  relation  to  the  claim  for  equal  dealing  between  class 
and  class,  the  presumptive  case  is  not  a  whit  better  in  regard 
to  the  aggregate  wealth  of  the  nation.  Wealth  is  accumu- 
lation; and  the  aggregate  of  that  accumulation  depends  upon 
the  net  surplus  left  b}'  the  prices  of  industrial  products  after 
defraying  out  of  them  the  costs  of  production.  To  make  this 
surplus  large  is  to  raise  national  wealth  to  its  maximum.  It 
is  largest  when  we  produce  what  we  can  produce  cheapest. 
It    is    diminished,    and    the    nation    is    so    far    impoverished. 


ii6  FREE  'IRADE  AND 

whenever  and  wherever  and  to  whatever  extent,  under  the 
cover  of  protective  laws,  men  are  induced  to  produce  articles 
leaving  a  smaller  surplus  instead  of  articles  leaving  a  larger 
one.  But  such  is  the  essence  of  protection.  In  England 
(speaking  roughly)  it  made  us  produce  more  wheat  at  high 
prices  instead  of  more  tissues  at  low  prices.  In  America 
it  makes  you  produce  more  cloth  and  more  iron  at  high 
prices  instead  of  more  cereals  and  more  cotton  at  low  prices. 
And  your  contention  is  that  by  making  production  thus 
costly  you  make  wages  high.  To  this  question  let  us  pass 
onwards;  yet  not  without  leaving  behind  us  certain  results 
which  I  think  you  will  find  it  hard  to  attack,  unless  it  be  in 
flank  and  rear.  Such  as  these:  First,  that  extra  price  im- 
posed on  class  A  for  the  benefit  of  class  B,  without  compen- 
sation, is  robbery,  and  robbery  not  rendered  (in  the  ab- 
stract) more  respectable  because  the  state  is  the  culprit. 
Secondly,  that  protection  means  dear  production,  and  dear 
productibn  means,  pi'o  tan  to,  national  impoverishment. 

But  the  view  of  the-  genuine  Protectionist  is  the  direct 
opposite  of  all  this.  I  understand  his  contention  to  be  that 
protection  is  (as  I  should  say  freedom  is)  a  mine  of  wealth; 
that  a  greater  aggregate  profit  results  from  what  you  would 
call  keeping  labor  and  capital  at  home  than  from  let- 
ting them  seek  employment  wherever  in  the  whole  world 
they  can  find  it  most  economically.  But  if  this  really  is  so, 
if  there  be  this  inborn  fertility  in  the  principle  itself,  why 
are  the  several  states  of  the  Union  precluded  from  applying 
it  within  their  own  respective  borders?  If  the  aggregate 
would  be  made  richer  by  this  internal  application  of  protec- 
tion to  the  parts,  why  is  it  not  so  applied?  On  the  other 
hand,  if  the  country  as  a  whole  would  by  this  device  be 
made  not  richer,  but  poorer,  through  the  interference  with 
the  natural  laws  of  production,  then  how  is  it  that  by  similar 
interference  the  aggregate  of  the  states,  the  great  common- 
wealth of  America,  can  be  made,  in  its  general  balance- 
sheet,  not  poorer,  but  richer? 

What  is  the  value  of  this  argument  about  keeping  capital 
at  home,  by  means  of  protection,  which,  but  for  protection. 


PROTECTIOX  117 

would  find  its  way  abroad?  The  contention  seems  to  be 
this:  capital  which  could  be  most  profitably  employed  abroad 
ought  by  legal  inducement  to  be  inveigled  into  remaining 
here,  in  order  that  it  may  be  less  profitably  employed  at 
home.  Our  object  ought  to  be,  not  to  pursue  those  indus- 
tries in  which  the  return  is  the  largest  when  compared  with 
the  outlay,  but  to  detain  in  this  country  the  largest  quantity 
of  capital  that  we  can.  Now,  here  I  really  must  pursue  the 
argument  into  its  hiding-places  by  testing  it  in  extremes.  If 
the  proper  object  for  the  legislator  is  to  keep  and  employ  in 
his  country  the  greatest  possible  amount  of  capital,  then  the 
British  Parliament  exempli  gratia  ought  to  protect  not 
onlj'  wheat  but  pineapples.  A  pineapple  is  now  sold  in 
London  for  eight  shilling-sixpence,  which,  before  we  import- 
ed that  majestic  fruit  from  the  tropics,  would  have  sold  for 
two  pounds.  Why  not  protect  the  grower  of  pineapples  at 
two  pounds  by  a  duty  of  400  per  cent.?  Do  not  tell  me  that 
this  is  ridiculous.  It  is  ridiculous  upon  my  principles;  but 
upon  your  principles  it  is  allowable,  it  is  wise,  it  is  obliga- 
tor}^— as  wise,  shall  I  say?  as  it  is  to  protect  cotton  fabrics 
by  a  duty  of  50  per  cent.  No;  not  as  wise  only,  but  even 
more  wise,  and  therefore  even  more  obligatory.  Because 
according  to  this  argument  we  ought  to  aim  at  the  produc- 
tion within  our  own  limits  of  those  commodities  which  re- 
quire the  largest  expenditure  of  capital  and  labor  to  rear 
them,  in  proportion  to  the  quantity  produced;  and  no  com- 
modity^ could  more  amply  fulfil  this  condition. 

If  protection  be,  as  its  champions  (or  victims)  hold,  in 
itself  an  economical  good,  then  it  holds  in  the  sphere  of  pro- 
duction the  same  place  as  belongs  to  truth  in  the  sphere  of 
philosophy,  or  to  virtue  in  the  sphere  of  morals.  In  this 
case,  you  cannot  have  too  much  of  it;  so  that,  while  mere 
protection  is  economical  good  in  embryo,  such  good  finds 
its  full  development  only  in  the  prohibition  of  foreign  trade. 
I  do  not  think  the  argument  would  be  unfair.  It  really  is 
the  logical  corollary  of  all  your  utterances  on  the  higli  wages 
which  (as  you  believe)  protection  gives  in  America,  and  on 
the  low  wages  which    (as  you  believe)    our  free  trade,   now 


Ii8  FREl':  TRADE  AND 

impartially  applied  all  round,  inflicts  upon  England.  But  I 
refrain  from  pressing  the  point,  because  I  do  not  wish  to  be 
responsible  for  urging  an  argument  which  tends  to  drive  the 
sincere  Protectionist  deeper  and  deeper  into,  not  the  mud,  but 
(what  we  should  call)  the  mire. 

But  now  I  suppose  the  answer  might  be  that  the  case 
which  I  have  put  is  an  extreme  case;  and  that  arguments  are 
not  well  judged  by  their  extremes.  In  some  matters,  for 
instance  in  moral  matters,  where  virtue  often  resides  in  a 
mean,  this  may  be  so.  But  the  laws  of  economy,  which  we 
are  now  handling,  approach  much  more  to  the  laws  of  arith- 
metic; and  if  your  reasoning  is  that  we  ought  to  prefer, 
among  the  fields  for  the  investment  of  capital,  what  is 
domestic  to  what  is  profitable,  it  is  at  least  for  the  Pro- 
tectionist to  show — and  he  never  has  shown — why  it  is  worth 
a  nation's  while  on  this  account  to  lose  five  shillings  in  the 
pound,  but  not  to  lose  (say)  ten  or  fifteen. 

I  will,  however,  instead  of  relying  on  an  unanswered  chal- 
lenge, push  the  war  into  the  enemy's  country.  I  shall  bold- 
ly contend  that  the  whole  of  this  doctrine — that  capital 
should  be  tempted  into  an  area  of  dear  production  for  the 
sake  or  under  the  notion  of  keeping  it  at  home — is  a  delusion 
from  top  to  bottom.  It  says  to  the  capitalist.  Invest  (say) 
a  million  dollars  in  mills  or  factories  to  produce  yarn  and 
cloth  which  we  could  obtain  more  cheaply  from  abroad — 
that  is,  be  it  remembered,  which  could  be  produced  abroad 
and  sent  here  at  a  smaller  cost  of  production,  or,  in  other 
words,  with  less  waste;  for  all  expenditure  in  production  be- 
yond the  measure  of  necessity — call  it  what  we  may — is  sim- 
ple waste.  To  induce  him  to  do  this,  you  promise  that  he 
shall  receive  an  artificial  instead  of  a  natural  price;  and.  in 
order  that  the  foreigner  may  not  drive  him  from  the  market, 
this  artificial  price  shall  be  saddled,  through  the  operation 
of  an  import  dut}^  upon  the  competing  foreign  commodity; 
not  in  order  to  meet  the  wants  of  the  state,  which  is  tlie  sole 
justifying  purpose  of  an  import  duty,  but  in  order  to  cover 
the  loss  on  wasteful  domestic  production,  and  to  make  it 
yield   a   profit.     And   all   this   in   order,   as   is    said,   that  the 


I 


PROTECTIOX  119 

capitalist  may  be  induced  to  keep  his  capital  at  home.  But, 
in  America,  besides  the  jealously  palisaded  field  of  dear  pro- 
duction, there  is  a  vast  open  expanse  of  cheap  production, 
namely,  in  the  whole  mass  (to  speak  roughly)  of  the  agricul- 
tural products  of  the  country,  not  to  mention  such  gifts  of 
the  earth  as  its  mineral  oils.  In  raising  these,  the  American 
capitalist  will  find  the  demand  of  the  world  unexhausted, 
however  he  may  increase  the  supply.  Why,  then,  is  he  to 
carry  his  capital  abroad  when  there  is  profitable  employment 
for  it  at  home?  If  protection  is  necessary  to  keep  American 
capital  at  home,  why  is  not  the  vast  capital  now  sustaining 
your  domestic  agriculture,  a'hd  raising  commodities  for  sale 
at  free-trade  prices,  exported  to  other  countries?  Or,  con- 
verse!}', since  vast  capitals  find  an  unlimited  field  for  em- 
ployment in  cheap  domestic  production  without  protection, 
it  is  demonstrated  that  protection  is  not  required  in  order  to 
keep  3'our  capital  at  home. 

Xo  adversary  will,  I  think,  venture  upon  answering  this 
by  saying  that  the  profits  are  larger  in  protected  than  in 
unprotected  industries.  First,  because  the  best  opinions 
seem  to  testify  that  in  your  protected  trades  profits  are 
hard  pressed  by  wages — a  state  of  things  very  likely  to  occur, 
because  protection,  resting  upon  artificial  stimulants,  tends  to 
disturb  and  banish  all  natural  adjustment.  But,  secondl3\ 
there  can  hardly  be  any  votary  of  protection  sufficiently 
Quixotic  to  contend  that  waste  ought  to  be  encouraged  in 
economical  processes,  and  the  entire  community  taxed  with- 
out fiscal  necessity,  in  order  to  secure  to  a  particular  order 
of  capitalists  profits  higher  than  those  reaped  by  another 
order — the  public  claim  (such  30U  hold  it)  of  l>oth  resting 
upon  exactly  the  same  liasis;  namely,  this — that  thej-  keep 
their  capitals  at  home. 

There  is  yet  another  point  which  I  cannot  pass  without 
notice.  I  have  not  admitted  that  protection  keeps  at  home 
any  capital  which  would  otherwise  go  abroad.  But  1  now 
for  the  moment  accept  and  reason  upon  the  assumption  that 
this  is  effected.  And  I  ask — indeed,  by  the  force  of  argu- 
ment  I   may  almost   require — you   to  make  an   admission   to 


[20  FREE  TRADE  AND 

me  which  is  of  the  most  serious  character;  namely,  this: 
that  there  is  a  great  deal  of  capital  undoubtedly  kept  at 
home  by  protection,  not  for  the  purpose  of  dear  production, 
which  is  partial  waste,  but  for  another  kind  of  waste,  which 
is  sheer  and  absolute  and  totally  uncompensated.  This  is 
the  waste  incurred  in  the  great  work  of  distributing  commodi- 
ties. If  the  price  of  iron  or  of  cotton  cloth  is  increased  50  per 
cent,  by  protection,  then  the  capital  required  by  every  whole- 
sale and  every  retail  distributor  must  be  increased  in  the 
same  proportion.  The  distributor  is  not  and  cannot  be,  in 
his  auxiliary  and  essentially  domestic  work,  protected  by  an 
import  duty,  any  more  than  can  the  scavenger  or  the  chim- 
ney-sweep. The  import  duty  adds  to  the  price  he  pays,  and 
consequently  to  the  circulating  capital  which  he  requires  in 
order  to  carry  on  his  traffic,  but  it  adds  nothing  to  the  rate 
of  profit  which  he  receives,  and  nothing  whatever  to  the 
employment  which  he  gives.  This  forced  increment  of  capi- 
tal sets  in  motion  no  labor,  and  is  compelled  to  work  in  the 
uncovered  field  of  open  trade.  It  has  not  the  primd-facie 
apology  (such  as  that  apology  may  be)  which  the  iron-maker 
or  the  mill-owner  may  make,  that  he  is  employing  American 
labor  which  would  not  otherwise  be  employed.  If  the  waste 
under  a  protective  duty  of  50  per  cent,  be  a  waste  of  50  per 
cent.,  the  waste  of  the  extra  capital  required  in  distribution  is 
a  waste  of  100  per  cent,  on  the  cost  of  the  operation;  for  it 
accomplishes  absolutely  nothing  on  behalf  of  the  community 
which  would  not  be  accomplished  equally  if  the  commodity 
were  50  per  cent,  less  in  price;  just  as  the  postman  distribut- 
ing letters  at  a  shilling  performs  no  better  or  other  service 
than  the  postman  distributing  letters  at  a  penny.  But  of 
distributors  the  name  is  legion:  they  constitute  the  vast  army 
of  the  wholesale  and  retail  tradesmen  of  a  country,  with  all 
the  wants  appertaining  to  them.  As  consumers,  they  are 
taxed  on  all  protected  commodities;  as  the  allies  of  producers 
in  the  business  of  distributing,  they  are  forced  to  do  with 
more  capital  what  could  be  done  as  well  with  less. 


PROTECTIOX  121 

P'.  Relation  Bctivcen  Protection  and  High   Wages 

Admitting  that  we  see  in  the  United  States  a  coexistence 
of  high  wages  with  protection,  but  denying  the  relation  of 
cause  and  effect  between  them,  I  may  be  asked  whether  I 
am  prepared  to  broaden  that  denial  into  an  universal  propi- 
sition  and  contend  that  in  no  case  can  wages  be  raised  by  a 
system  of  protection. 

My  answer  is  this:  A  country  cannot  possibly  raise  its 
aggregate  wage  fund  by  protection,  but  must  inevitably  re- 
duce it.  It  is  a  contrivance  for  producing  dear  and  for  sell- 
ing dear,  under  cover  of  a  wall  or  fence  which  shuts  out  the 
cheaper  foreign  article,  or  handicaps  it  on  admission  by  the 
imposition  of  a  heavy  fine.  Yet  I  may  for  the  moment 
allow  it  to  be  possible  that,  in  some  particular  trade  or 
trades,  wages  may  be  raised  (at  the  expense  of  the  commun- 
ity) in  consequence  of  protection.  There  was  a  time  when 
America  built  ships  for  Great  Britain;  namely,  before  the 
American  Revolution.  She  now  imposes  heavy  duties  to 
prevent  our  building  ships  for  her.  Even  my  own  recollec- 
tion goes  back  to  the  period,  between  sixty  and  seventy 
years  ago,  when  by  far  the  most,  and  also  the  best,  part  of 
the  trade  between  us  was  carried  in  American  bottoms.  Mr. 
McKay  refers  in  his  letter  to  a  period  before  the  War  when 
she  could  compete  with  British  labor,  but  when,  as  he  in- 
forms us,  3'our  shipwright  was  paid  six  shillings  a  day, 
whereas  now  he  has  fourteen;  which  means  that,  as  the 
profits  of  capital  are  not  supposed  to  have  declined,  the  com- 
munity pays  for  ships  more  than  twice  as  much  as  it  used 
to  pay,  and  your  ship-builders  do  a  small  trade  with  a  large 
capital  instead  of  doing  (as  before)  a  large  trade  with  a 
(relatively)  small  capital. 

I  v/ill  not  now  stop  to  dilate  on  my  admiration  for  the 
resources  of  a  community  which  can  bear  to  indulge  in  these 
impoverishing  processes;  nor  even  to  ask  whether  the  ship- 
wright in  the  small  trade  has  the  same  constancy  of  wage  as 
he  had  in  the  large  one,  or  whether  his  large  receipt  is 
countervailed  by  his  large  outlay  on  the  necessaries  and 
comforts    of    life.     But   I   will    look    simply   to    the    question 


122  I-RHR  TRADE  AND 

whether  protection  in  this  case  raises  wages.  I  do  not  un- 
dertake to  say  it  is,  in  a  limited  way,  impossible.  If  it  be 
true,  the  steps  in  the  process  are,  I  conceive,  as  follows: 
America  absolutely  requires  for  her  own  use  a  certain  num- 
ber and  tonnage  of  vessels.  Congress  lays  such  duties  upon 
foreign  ships  and  materials  that  they  shall  not  be  obtained 
from  abroad  at  less  than  double  the  price  at  which  they 
are  sold  in  the  open  market.  Therefore  the  American  ship- 
builder can  force  his  countrymen  to  pay  him  any  sum,  not 
exceeding  two  prices,  for  his  commodity.  The  remaining 
point  is  the  division  of  the  amount  between  the  capitalist  and 
the  workman.  That  is  governed  by  the  general  state  of  the 
labor  market  in  the  country.  If  the  labor  market,  although 
open  to  the  world,  is  insufficiently  supplied,  then  the  wage- 
earner  may  possibly,  in  a  given  case,  come  in  for  a  share  of 
the  monopoly  price  of  ships.  If  the  handwork  be  one  re- 
quiring a  long  apprenticeship  (so  to  call  it),  and  thereby 
impeding  the  access  of  domestic  competitors,  this  will  aug- 
ment his  share.  Then  why  not  the  like,  some  one  will  ask, 
in  all  cases?  Because  the  community  in  the  given  case  pays 
the  price  of  the  monopoly — that  is  to  say,  throws  the  price 
to  waste,  and  because,  while  a  trader  in  a  multitude  of  com- 
modities may  lose  upon  one  of  them,  and  yet  may  have  a 
good  balance-sheet  upon  the  whole,  he  must  not  and  cannot 
lose  upon  them  all  without  ceasing  to  be  a  trader;  and  a 
nation,  with  respect  to  its  aggregate  of  production,  is  as  a 
single  trader. 

Without,  then,  absolutely  denying  it  to  be  possible  that 
m  some  isolated  and  exceptional  cases  there  may  be  a  rela- 
tion between  protection  (and  all  protection,  so  far  as  it  goes, 
is  monopoly)  and  high  wages,  I  contend  that  to  refer  gen- 
erally the  high  rate  of  wages  in  the  United  States  to  this 
cause  would  be  nothing  less  than  preposterous.  And  on  this 
part  of  the  case  I  desire  to  propound  what  appears  to  me  to 
be  in  the  nature  of  a  dilemma,  with  some  curiosity  to  know 
how  the  champions  of  protection  would  be  disposed  to  meet 
it.  Let  me  assume,  for  the  purpose  of  trying  the  issue,  that 
one-half   of  the    salable    products    of    the    United   States    are 


PROTECTION  123 

agricultural  and  one-half  manufactured,  and  that  the  manu- 
factured moiety  are  covered  by  protection,  while  the  agsi- 
cultural  half,  since  they  are  articles  of  large  export,  bear 
only  such  a  price  as  is  assigned  to  them  by  foreign  compe- 
tition in  the  markets  where  they  are  sold.  I  take  this  rough 
estimate  for  the  sake  of  simplicity,  and  in  the  same  view  I 
overlook  the  fact  that  the  sugar  which  you  grow  is  still  cov- 
ered, as  it  used  to  be  covered,  by  an  operative  protection. 
One-half,  then,  of  American  labor  enjoys  protective  wages; 
the  other  half  of  the  products  of  the  United  States  is  fur- 
nished by  mere  "free-trade  toilers."  Now,  I  want  to  ask 
whether  the  wages  of  the  agricultural  half  are  raised  by  the 
existence  of  protective  laws  which  cover  the  artisan  half. 
This  you  cannot  possibly  affirm,  because  it  is  an  elementary 
fact  that  (given  the  quantity  of  labor  in  the  market)  they 
are  governed  by  the  prices  of  the  commodities  they  produce, 
and  that  those  prices  are  free-trade  prices.  You  have  "free- 
trade  toilers"  all  over  your  country,  and  by  their  side  you 
have  protected  artisans.  I  ask,  then,  next,  this  question: 
Is  the  remuneration  of  the  "free-trade  toilers,"  all  things 
taken  into  account,  equivalent  to  that  of  the  protected  arti- 
sans? If  it  is  not,  why  do  not  the  agricultural  men  pass  over 
into  the  provinces  of  demand  for  manufacturing  and  mining 
labor,  and,  by  augmenting  the  supply,  reduce  and  equalize 
the  rate?  Which  is  like  asking.  How  comes  it  that  a  man  is 
content  with  one  loaf  when  two  are  offered  him?  The 
answer  would  be,  He  is  not  content:  whenever  he  can,  he 
takes  the  two  and  leaves  the  one.  It  follows  that  in  this 
case  there  exists  no  excess  of  wage  for  him  to  appropriate. 
The  loaf,  meaning  by  the  loaf  not  a  mere  money  rate,  but 
that  money  rate  together  with  all  its  incidents  of  all  kinds, 
is  equal  as  between  the  protected  and  the  unprotected  labor- 
er. The  proportions  of  the  two  kinds  of  labor  are  governed 
in  the  long  run  (and  perhaps  in  America  more  certainly 
and  rapidly  than  anywhere  else)  by  the  advantages  attaching 
to  each  respectively.  In  other  words,  the  free-trade  wages 
are  as  good  as  the  protected  wages;  and  (apart  from  small 
and   exceptional   cases)    the   idea   that  protection   raises   the 


124  FREE  TRADE  AND 

rate  of  wages  on  any  large  scale  or  in  any  open  field  is  an 
illusion. 

But  I  proceed  to  consider  the  vast  exceptional  advantages 
which  as  a  country  the  United  States  enjoy;  which  enable 
them  to  bear  the  process  of  depletion  that,  through  the  sys- 
tem of  protection,  it  is  their  pleasure  to  undergo,  and  which 
for  them  cause  the  question  to  be  one  not  of  absolute  retro- 
gression, but  only  of  hampered  and  retarded  progress. 

VI.    On    the    Reasons    IVIiy    Protection    Only   Injures,    and 
Does  Not  Rnin    flic   United  Slates 

I  hold  that  dear  production,  even  if  compensated  to  the 
producer  by  high  price,  is  a  wasteful  and  exhausting  process. 
I  may  still  be  asked  for  a  detailed  answer  to  the  question, 
"How,  then,  is  it  that  America,  which,  as  you  say,  makes 
enormous  waste  by  protection,  nevertheless  outstrips  all 
other  countries  in  the  rapid  accumulation  of  her  wealth?" 
To  which  my  general  answer  is  that  the  case  is  like  that  of 
an  individual  who,  with  wasteful  expenditure,  has  a  vast 
fortune,  such  as  to  leave  him  a  large  excess  of  receipts.  But 
for  his  waste  that  excess  would  be  larger  still. 

I  will,  then,  proceed  to  set  forth  some  of  the  causes 
which,  by  giving  exceptional  energy  and  exceptional  oppor- 
tunity to  the  work  of  production  in  America,  seem  to  allow 
(in  homely  phrase)  of  her  making  ducks  and  drakes  of  a 
large  portion  of  what  ought  to  be  her  accumulations,  and 
yet,  by  virtue  of  the  remainder  of  them,  to  astonish  the 
world. 

I.  Let  me  observe,  first,  that  America  produces  an  enor- 
mous mass  of  cotton,  cereals,  meat,  oils,  and  other  commodi- 
ties, which  are  sold  in  the  unsheltered  market  of  the  world 
at  such  prices  as  it  will  yield.  The  producers  are  fined  for 
the  benefit  of  the  protected  interests,  and  receive  nothing  in 
return;  but  they  obtain  for  their  country,  as  well  as  for  the 
world,  the  whole  advantage  of  a  vast  natural  trade — that  is 
to  say,  a  trade  in  which  production  is  carried  on  at  a  mini- 
mum cost  in  capital  and  labor  as  compared  with  what  the 
rest  of  the  world  can  do. 


PROTECTIOX  125 

2.  America  invites  and  obtains  in  a  remarkable  degree 
from  all  the  world  one  of  the  great  elements  of  production, 
without  tax  of  any  kind — namely,  capital. 

3.  While  securing  to  the  capitalist  producer  a  monopoly 
in  the  protected  trades,  she  allows  all  the  world  to  do  its 
best,  by  a  free  immigration,  to  prevent  or  qualify  any  cor- 
responding monopoly  in  the  class  of  workmen. 

4.  She  draws  upon  a  bank  of  natural  resources  so  vast 
that  it  easily  bears  those  deductions  of  improvidence  which 
simply  prevent  the  results  from  being  vaster  still. 

Let  me  now  mention  some  at  least  among  those  elements 
of  the  unrivalled  national  strength  of  America  which  explain 
to  us  why  she  is  not  ruined  by  the  huge  waste  of  the  pro- 
tective system.  And  first  of  these  I  place  the  immense  ex- 
tent and  vastness  of  her  territory,  which  make  her  not  so 
much  a  country  as  in  herself  a  world,  and  not  a  very  little 
world.  She  carries  on  the  business  of  domestic  exchanges  on 
a  scale  such  as  mankind  has  never  seen.  Of  all  the  staple 
products  of  human  industry  and  care,  how  few  are  there 
which,  in  one  or  another  of  her  countless  regions,  the  soil 
of  America  would  refuse  to  yield.  No  other  country  has  the 
same  diversity,  the  same  free  choice  of  industrial  pursuit, 
the  same  option  to  lay  hold  not  on  the  good  merely,  but  on 
the  best.  Historically,  all  international  trade  has  had  its 
broadest  basis  in  the  interchange  between  tropical  or  south- 
ern commodities  and  those  of  the  temperate  or  northern 
zone.  And  even  this  kind  of  exchange  America  possesses 
on  a  considerable  scale  within  her  own  ample  borders. 

Apart  from  this  wide  variety,  I  suppose  there  is  no  other 
country  of  the  whole  earth  in  which,  if  we  combine  to- 
gether the  surface  and  that  which  is  below  the  surface.  Na- 
ture has  been  so  bountiful  to  man.  The  mineral  resources 
of  our  own  Britannic  Isle  have,  without  question,  principally 
contributed  to  its  commercial  preeminence.  But  when  we 
match  them  with  those  of  America,  it  is  Lilliput  against 
Brobdingnag.  I  believe  that  your  coal-field,  for  example, 
is  to  ours  nearly  in  the  proportion  to  thirty-six  to  one.  Now, 
this  vast  aggregate   superiority  of  purely  natural   wealth  is 


1 26  FREE  TRADE  AND 

simpl}^  equivalent  to  the  gift,  say,  of  a  queen  in  a  game  of 
chess,  or  to  a  start  allowed  in  a  race  by  one  boy  to  another; 
with  this  difference:  that  America  could  hold  her  own  against 
all  comers  without  the  queen,  and  that,  like  her  little  Lord 
Fauntleroy,  she  can,  if  she  likes,  run  the  race,  and  perhaps 
win  it,  upon  equal  terms.  By  protection  she  makes  a  bad 
move,  which  helps  us  to  make  fight,  and  ties  a  heavy  clog 
upon  her  feet,  so  that  the  most  timid  among  us  need  not 
now  to  greatly  dread  her  competition  in  the  international 
trade  of  the  world. 

Again,  the  international  position  of  America  ma}^.  in  a 
certain  light,  be  illustrated  by  comparing  together  the  eco- 
nomical conditions  under  which  coal  has  been  produced  in  the 
different  districts  of  this  island.  The  royalty  upon  coal 
represents  that  surplus  over  and  above  estimated  trading 
profit  from  a  mine  which  the  lessee  can  afford  to  pay  the 
landlord.  In  England,  generally,  royalties  have  varied  from 
about  sixpence  a  ton  to  ninepence  in  a  few  cases;  scarcely 
ever  higher.  But  in  Staffordshire,  owing  to  the  existence  of 
a  remarkable  coal-measure,  called  the  ten-yard  coal,  and  to 
the  presence  of  ironstone  abundantly  interstratified  with  the 
coal,  the  royalty  has  often  amounted  to  no  less  than 
three  shillings.  This  excess  has  a  real  analogy  to  the 
surplus  bounty  of  Mother  Earth  in  America.  And  when  I 
see  her  abating  somewhat  of  her  vast  advantages  through  the 
trick  of  protection,  I  am  reminded  of  the  curious  fact  that 
(as  it  happens)  this  unusual  abundance  of  the  mineral  made 
the  getting  of  it  in  Staffordshire  singularly  wasteful,  and 
that  fractions,  and  no  small  fractions,  of  the  ten-yard  coal 
are  now  irrecoverably  buried  in  the  earth,  like  the  tribute 
which  America  has,  and  has,  as  it  seems,  contentedly,  been 
paying  to  her  protected  interests. 

In  most  of  the  elements  of  cheapness,  America,  wholly 
surpasses  us;  as,  for  example,  in  the  natural,  indefeasible 
advantages  she  enjoys  through  the  vastness  not  only  of  the 
soils  which  produce,  but  of  the  markets  which  consume,  her 
productions.  I  have  lately  seen  a  penny  periodical,  pub- 
lished by  Messrs.  Harper,  of  New  York,  which  far  surpasses 


PROTECTIOX  127 

all  ihat  the  enterprise  and  skill  of  our  publishers  have  been 
able  to  produce.  But  all  these  plus  quantities  she  works  hard 
to  convert  into  iiii)niscs  through  the  devouring  agency  of  pro- 
tection. 

There  are  two  other  particulars  which  I  have  to  notice 
before  quitting  this  portion  of  the  subject.  Each  of  them 
involves  a  compliment — the  one  to  us,  the  other  to  your- 
selves. As  there  is  an  invidious  element  in  all  self-praise,  I 
will  get  rid  first  of  what  touches  us.  It  is  this:  Trade  is,  in 
one  respect  at  least,  like  mercy.  It  cannot  be  carried  on 
without  conferring  a  double  benefit.  Again,  trade  cannot  be 
increased  without  increasing  this  benefit,  and  increasing  it 
(in  the  long  run)  on  both  sides  alike.  Freedom  has  enor- 
mously extended  our  trade  with  the  countries  of  the  w^orld, 
and,  above  all  others,  with  the  United  States.  It  follows 
that  they  have  derived  immense  benefit,  that  their  waste  has 
been  greatly  repaired,  their  accumulations  largely  augment- 
ed, through  British  legislation.  We  have  not  on  this  ground 
any  merit  or  any  claims  whatever.  We  legislated  for  our 
own  advantage,  and  are  satisfied  with  the  benefit  we  have 
received.  But  it  is  a  fact,  and  a  fact  of  no  small  dimensions, 
which,  in  estimating  the  material  development  of  America, 
cannot  be  lost  sight  of. 

My  second  point  touches  the  circumstances  of  the  na- 
tional infancy  and  growth.  It  would  be  alike  futile  and  un- 
just, in  pointing  out  the  singular  advantages  over  the  outer 
world  which  nature  has  given  to  America,  not  to  take  notice 
of  those  advantages  which  her  people  have  earned  or  created 
for  themselves.  In  no  country,  I  suppose,  has  there  been  so 
careful  a  cultivation  of  the  inventive  facult3^  And  if  Amer- 
ica has  surpassed  in  industrial  discoveries  the  race  from 
which  her  people  sprang,  we  do  not  grudge  her  the  honor  or 
the  gain.  Americans  are  economists  in  inventions  and  do 
not  let  them  slip.  For  example,  the  reaping-machine  of 
modern  times,  I  believe,  was  invented  in  Forfarshire,  but 
did  not  pass  into  any  general  use.  Still-born  there,  it  dis- 
appeared; but  it  was  appreciated  and  established  in  America, 
and    then    came    back    among    us    as    an    importation    from 


128  FREE  TRADE  AND 

thence,  and  was  at  last  appreciate!  and  established  here. 
The  scarcity  of  labor  has,  in  truth,  supplied  the  great  Re- 
public with  an  essential  element  of  severe  and  salutary  disci- 
pline. 

The  youth  of  America  was,  especially  in  New  England,  a 
youth  not  of  luxury,  but  of  difficulty.  Nature  dealt  some- 
what sternly  with  your  ancestors;  and  to  their  great  advan- 
tage. They  were  reared  in  a  mold  of  masculine  character, 
and  were  made  fit  to  encounter,  and  turn  to  account,  all 
vicissitudes.  As  the  country  opened,  they  were  confronted 
everywhere  with  one  great  and  crying  want,  the  scarcity  of 
labor.  So  they  were  put  upon  the  application  of  their  mental 
powers  to  labor-saving  contrivances,  and  this  want  grew  as 
fast  as,  or  faster  than,  it  was  supplied.  Thus  it  has  come 
about  that  a  race  endued  with  consummate  ability  for  labor 
has  also  become  the  richest  of  all  races  in  instruments  for 
dispensing  with  labor.  The  provision  of  such  instruments 
has  become  with  you  a  standing  tradition,  and  this  to  such  a 
degree  that  you  have  taken  your  place  as  (probably)  the 
most  inventive  nation  in  the  world.  It  is  thus  obvious 
enough  that  a  remarkable  faculty  and  habit  of  invention, 
which  goes  direct  to  cheapness,  helps  to  fill  up  that  gap  in 
your  productive  results  which  is  created  by  the  wastefulness 
of  protection.  The  leakage  in  the  national  cistern  is  more 
than  compensated  by  the  efficiency  of  the  pumps  that  sup- 
ply it. 

America  makes  no  scruple,  then,  to  cheapen  everything 
in  which  labor  is  concerned,  and  she  gives  the  capitalist  the 
command  of  all  inventions  on  the  best  terms  she  can  con- 
trive. Why?  Only  because  this  is  the  road  to  national 
wealth.  Therefore,  she  has  no  mercy  upon  labor,  but  dis- 
places it  right  and  left.  Yet  when  we  come  to  the  case  where 
capital  is  most  in  question,  she  enables  her  ship-builders, 
her  iron-masters,  and  her  mill-owners  to  charge  double  or 
semi-double  prices;  which,  if  her  practice  as  to  labor-saving 
be  right,  must  be  the  road  to  national  poverty.  E  converso, 
if  she  be  right  in  shutting  out  foreign  ships  and  goods  to 
raise  the  receipts  of  the  American  capitalist,  why  does   she 


PROTECTIOX  129 

not  tax  the  reaping-machine  and  the  American  "devil"*  to 
raise  the  receipts  of  the  American  laborer?  Not  that  I 
recommend  such  consistency.  I  rejoice  in  the  anomalies 
and  contradictions  by  virtue  of  which  the  applications  of 
science  everywhere  abound  through  the  states  for  the  bene- 
fit of  their  populations,  and  without  doubt,  though  more 
circuitously,  of  ours  also,  and  of  the  world  at  large. 

I  have  still  to  notice  one  remaining  point.  It  is  this:  I 
do  not  doubt  that  production  is  much  cheapened  in  America 
by  the  absence  of  all  kinds  of  class  legislation  except  that 
which  is  termed  protection;  an  instance  alike  vicious  and 
gigantic,  but  still  an  instance  only.  In  our  British  legisla- 
tion, the  interest  of  the  individual  or  the  class  still  rather 
largely  prevails  against  that  of  the  public.  In  America,  as 
I  understand  the  matter,  the  public  obtains  full  and  equal 
justice.  I  take  for  example  the  case  of  the  railroads;  that 
vast  creation,  one  of  almost  universal  good  to  mankind,  now 
approaching  to  one-tenth  or  one-twelfth  of  our  entire  na- 
tional possessions.  It  is  believed  that  in  unnecessary  Parli- 
mentary  expenditure,  and  in  abnormal  prices  paid  for  land, 
the  railways  of  this  country  were  taxed  to  between  fifty  and 
a  hundred  millions  sterling  beyond  the  natural  cost  of  their 
creation.  Thus  does  the  spirit  of  protection,  only  shifting 
its  form,  still  go  ravening  about  amongst  us.  Nothing  is  so 
common  here  as  to  receive  compensation;  and  we  get  it  not 
only  for  injuries,  but  for  benefits.  But  while  the  great  na- 
tion of  the  Union  rightly  rejoices  in  her  freedom  from  our 
superstitions,  why  should  she  desire,  create  and  worship  new 
superstitions  of  her  own? 

]'!!.  The  Moral  Aspect  of  the  Subject 

I  am  sorry  to  say  that,  although  I  have  closed  the  econo- 
mical argument,  I  have  not  yet  done  with  the  counts  of  my 
indictment  against  protection.  I  have,  indeed,  had  to  ask 
m.yself  whether  I  should  be  within  my  right  in  saying  hard 
things,    outside    the    domain    of    political    economy,    about    a 


♦So  called  here  on  its  first  introduction.  I  rather  believe  it  has 
recently  acquired   some  more  euphonious  name. 


130  KREE  TR.VDE  AND 

system  which  has  commended  itself  to  the  great  American 
state  and  people,  although  those  hard  things  are,  in  part  at 
least,  strictly  consequent  upon  what  has  been  said  before. 
Indeed,  the  moral  is  so  closely  allied  to  the  economical  argu- 
iTient  as  to  be  intertwined  with  it  rather  than  consequent 
upon  it.  Further,  I  ])elieve  the  people  of  the  United  States 
to  be  a  people  who,  like  that  race  from  which  they  are 
sprung,  love  plain  speaking;  and  I  do  not  believe  that  to 
suppress  opinions  deliberately  and  conscientiously  held  would 
be  the  way  to  win  your  respect. 

I  urge,  then,  that  all  protection  is  morally  as  well  as 
economically  bad.  This  is  a  very  dififeient  thing  from  say- 
ing that  all  Protectionists  are  bad.  Many  of  them,  without 
doubt,  are  good,  nay,  excellent,  as  were  in  this  country 
many  of  the  supporters  of  the  Corn  Law.  It  is  of  the  ten- 
dencies of  a  system  that  I  speak,  which  operate  variously, 
upon  most  men  unconsciously,  upon  some  men  not  at  all; 
and  surely  that  system  cannot  be  good  which  makes  an 
individual,  or  a  set  of  individuals,  live  on  the  resources  of 
the  community  and  causes  him  relatively  to  diminish  that 
store,  which  duty  to  his  fellow-citizens  and  to  their  equal 
rights  should  teach  him  by  his  contributions  to  augment. 
The  habit  of  mind  thus  engendered  is  not  such  as  altogether 
befits  a  free  country  or  harmonizes  with  an  independent 
character.  And  the  more  the  system  of  protection  is  dis- 
cussed and  contested,  the  more  those  whom  it  favors  are 
driven  to  struggle  for  its  maintenance,  the  farther  they  mu>t 
insensibly  deviate  from  the  law  of  equal  rights,  and,  per- 
haps, even  from  the  tone  of  genuine  personal  independence. 

In  speaking  thus,  we  speak  greatly  from  our  own  expe- 
rience. I  have  personal!}^  lived  through  the  varied  phases 
of  that  experience,  since  we  began  that  battle  between 
monopoly  and  freedom  which  cost  us  about  a  quarter  of  a 
century  of  the  nation's  life.  I  have  seen  and  known,  and 
had  the  opportunity  of  comparing,  the  temper  and  frame  of 
mind  engendered  first  by  our  protectionism,  which  we  now 
look  back  upon  as  servitude,  and  then  by  the  commercial 
freedom   and   equality  which   we   have    enjoyed    for    the    last 


il 


PROTECTION  131 

thirty  or  forty  years.  The  one  tended  to  liarden  into  posi- 
tive selfishness;  the  other  has  done  much  to  foster  a  more 
liberal  tone  of  mind. 

The  economical  question  which  I  have  been  endeavoring 
to  discuss  is  a  very  large  one.  Nevertheless,  it  dwindles,  in 
my  view,  when  it  is  compared  with  the  paramount  question, 
of  the  American  future  viewed  at  large.  There  opens  before 
the  thinking  mind  when  this  supreme  question  is  propounded 
a  vista  so  transcending  all  ordinarj^  limitation  as  requires 
an  almost  preterhuman  force  and  expansion  of  the  mental 
eye  in  order  to  embrace  it.  Some  things,  and  some  weighty 
things,  are  clear  so  far  as  the  future  admits  of  clearness. 
There  is  a  vision  of  territory,  population,  power,  passing 
beyond  all  experience.  The  exhibition  to  mankind,  for  the 
first  time  in  history,  of  free  institutions  on  a  gigantic  scale, 
is  momentous,  and  I  have  enough  faith  in  freedom,  enough 
distrust  of  all  that  is  alien  from  freedom,  to  believe  that  it 
will  work  powerfully  for  good.  But  together  with  and  be- 
hind these  vast  developments  there  will  come  a  correspond- 
ing opportunity  of  social  and  moral  influence  to  be  exer- 
cised over  the  rest  of  the  world.  And  the  question  of  ques- 
tions for  us,  as  trustees  for  our  posterity,  is,  What  will  be 
the  nature  of  this  influence?  Will  it  make  us.  the  children 
of  the  senior  races,  who  will  have  to  come  under  its  action, 
better  or  worse?  Not  what  manner  of  producer,  but  what 
manner  of  man,  is  the  American  of  the  future  to  be? 

I  am.  I  trust,  a  lover  of  human  advancement:  but  I  know 
of  no  true  progress  except  upon  the  old  lines.     Our  race  has 
not  lived  for  nothing.     Their  pilgrimage  through  this  deeply 
shadowed  valley  of  life  and  death  has  not  been  all  in  vain. 
They  have  made  accumulations  on  our  behalf.     I  resent,  and 
to  the  best  of  my  power  I   would  resist,   every  attempt  to 
deprive  us  either  in  whole  or  in  part  of  the  benefit  of  those 
accumulations.     The  American  love  of  freedom  will,  beyond 
all    doubt,    be    to    some    extent    qualified,    perhaps    in    some 
cases   impaired,  by  the  subtle  influence   of  gold,  aggregated 
by  many  hands  in  vaster  masses  than  have  yet  been  known. 
Aurum  per  medios  ire  satellites, 
Et  perrumpere   amat   saxa,    potentius 
Ictu  fulmineo. 


132  FREE  TRADE  AND 

But,  to  rise  higher  still,  how  will  the  majestic  figure,  about 
to  become  the  largest  and  most  powerful  on  the  stage  of  the 
world's  history,  make  use  of  his  power?  Will  it  be  instinct 
with  more  life  in  proportion  to  its  material  strength!  Will 
he  uphold  and  propagate  the  Christian  tradition  with  that 
surpassing  energy  which  marks  him  in  all  the  ordinary  pur- 
suits of  life?  Will  he  maintain  with  a  high  hand  an  unfalter- 
ing reverence  for  that  law  of  nature  which  is  anterior  to  the 
Gospel,  and  supplies  the  standard  to  which  it  appeals,  the 
very  foundation  on  which  it  is  built  up?  Will  he  fully  know, 
and  fully  act  upon  the  knowledge,  that  both  reverence  and 
strictness  are  essential  conditions  of  all  high  and  desirable 
well-being?  And  will  he  be  a  leader  and  teacher  to  us  of 
the  old  world  in  rejecting  and  denouncing  all  the  miserable 
degrading  sophistries  by  which  the  arch-enemy,  ever  devis- 
ing more  and  more  subtle  schemes  against  us,  seeks  at  one 
stroke  perhaps  to  lower  us  beneath  the  brutes,  assuredly  to 
cut  us  off  froin  the  hope  and  from  the  source  of  the  final 
good?  One  thing  is  certain:  his  temptations  will  multiply 
with  his  power;  his  responsibilities  with  his  opportunities. 
Will  the  seed  be  sown  among  the  thorns?  Will  worldliness 
overrun  the  ground  and  blight  its  fiowers  and  its  fruit?  On 
the  answers  to  these  questions,  and  to  such  as  these,  it  will 
depend  whether  this  new  revelation  of  power  upon  the  earth 
is  also  to  be  a  revelation  of  virtue;  whether  it  shall  prove 
to  be  a  revelation  of  virtue;  whether  it  shall  prove  a  bless- 
ing or  a  curse.  May  heaven  avert  every  darker  omen,  and  grant 
that  the  latest  and  largest  growth  of  the  great  Christian  civili- 
zation shall  also  be  the  brightest  and  the  best ! 


Independent.  65:  1209-11.  November  26,  1908. 

Moral  Aspect  of  the  Protective  Tariff.     David  Starr  Jordan. 

Every  argument  for  and  against  the  protective  tarifif  has 
been  stated  a  thousand  times.  There  is  nothing  new  to  be 
said.  But  at  the  bottom  of  every  argument  remains  the 
necessary  recognition  of  its  primal  iniquity.     The  fundamen- 


PROTECTION  133 

tal  idea  in  American  polity  is  that  of  a  square  deal  to  all 
men.  each  standing  on  his  own  feet,  with  exclusive  privileges 
or  governmental  aid  to  no  man  and  to  no  class  of  men.  In- 
equality before  the  law,  entail,  primogeniture,  church  control 
of  state,  state  control  of  church,  class  consciousness  and 
class  legislation  were  evils  in  English  polity  which  our 
fathers  would  not  tolerate.  On  account  of  these  they  left 
England.  They  chose  the  hardships  of  Plymouth  Rock  and 
later  the  hazards  of  war  rather  than  to  put  up  with  any  of 
them.  If  there  is  one  American  idea  or  ideal  to  be  segre- 
gated from  the  rest  it  is  this  of  equality  before  the  law. 
And  it  is  this  ideal  which  is  violated  absolutely  and  con- 
tinuously in  the  theory  and  in  the  practice  of  the  protective 
tarifif. 

The  protective  tarifif  is  a  device  for  enhancing  the  home 
price  of  the  articles  it  covers  by  a  tax  on  commerce,  by 
forcing  the  body  of  citizens  to  pay  tribute  to  producers  at 
home.  To  these  the  state  in  futile  fashion  tries  to  guarantee 
"a  reasonable  profit."  These  producers  may  be  capitalists 
or  directors  of  industry,  or  they  may  be  the  laborers  who 
contribute  effort  only,  without  responsibility  for  the  way  in 
which  effort  may  be  applied.  It  matters  not  whether  capi- 
talists or  laborers,  either  or  both  actually  profit  at  your 
expense  or  mine  or  that  of  foreign  producers.  The  protec- 
tive tariff  intends  that  they  should  thus  profit,  at  least  to  a 
reasonable  degree.  But  in  the  theory  of  our  republic  it  is  no 
part  of  the  state  to  guarantee  to  any  one  "a  reasonable  pro- 
fit," nor  to  protect  any  one  from  a  reasonable  loss.  Its  function 
is  to  see  fair  play  and  freedom  of  operation.  It  is  a  breach 
of  the  principle  of  equality  before  the  law  that  the  state 
should  do  anything  more.  To  guarantee  any  one  a  reason- 
able profit  is  to  do  so  at  the  expense  of  the  rest.  The  theory 
is  one  of  injustice,  whatever  its  result  in  practice'.  In  prac- 
tice, whatever  is  gained  on  the  one  hand  is  lost  on  the  other. 
Even  if  we  could  force  foreigners  to  pay  the  tariff  taxes, 
which  is  sometimes  possible,  their  capacity  as  buyers  is  cor- 
respondingly decreased.  International  trade  is  barter,  and 
every  burden  it  carries  works  a  corresponding  loss  to  both 


134  FREE  TRADE  AND 

parties  in  the  transaction.  Moreover,  as  a  matter  of  fact, 
the  protective  tariff  yields  little  gain  to  the  laborer,  because 
continued  immigration  brings  him  new  competitors  and  be- 
cause he  is  in  his  turn  one  of  the  general  public  who  suffer 
from  the  commerce  tax.  If  wages  are  raised  by  the  tariff, 
so  is  the  cost  of  living,  and  the  cost  of  living  comes  first. 
For  the  director  or  employer  of  labor,  the  case  is,  on  the 
whole,  not  much  better,  because  the  cost  of  his  product  is 
enhanced  by  the  tariff  taxes  on  everything  which  enters 
into  his  process  of  manufacture.  In  so  far  as  a  tariff  is 
successful  in  gaining  profit,  it  is  so  because  it  is  virtually 
prohibitory.  That  the  evils  of  prohibtory  tariffs  are  so 
little  felt  by  us  is  due  to  the  fact  that  our  country  is  a 
world  in  itself,  with  untaxed  trade  throuout  a  district  com- 
prising nearly  a  third  of  the  specialized  production  area  of 
the  globe.  Yet  within  this  favored  area,  with  all  its  vast 
range  in  competition,  it  is  possible  sometimes  to  monopolize 
production  in  some  particular  direction.  Such  a  monopoly 
we  now  call  a  trust.  To  the  development  of  such  mon- 
opolies the  tariff  naturally  lends  itself,  tho  it  would  be  un- 
fair to  declare  it  to  be  the  parent  of  all  trusts.  It  is  enough 
to  recognize  that  its  general  purpose  is  the  same — the  de- 
velopment thru  legal  means  of  industrial  and  economic 
monopoly,  of  the  enrichment  of  a  class  or  of  a  group  of 
classes  at  the  expense  of  the  citizens  at  large.  This  is 
theoretically  contrary  to  American  polity.  If  the  princi- 
ples of  our  republic  in  regard  to  "equal  justice  to  all,  ex- 
clusive privileges  to  none,"  are  right,  then  the  theory  and 
the  practice  of  the  protective  tariff  are  wrong.  That  it 
works  thru  the  method  of  indirect  taxation  disguises  but 
does  not  justify  its  injustice. 

The  prohibitory  tax  on  importable  products  is  said  to 
have  brought  its  justification  in  the  ultimate  lowering  of 
price  of  the  articles  concerned.  The  same  claim  is  made 
in  behalf  of  the  trusts,  and  much  evidence  is  brought  for- 
ward in  both  cases  to  justify  this  claim.  But  the  real  cause 
of  the  reduction  in  price  is  seldom  traceable  to  the  trust  or 
the  tariff.      Doubtless,    for  example,    iron   is   cheaper   in   this 


PROTECTION  135 

country  under  a  high  tariff  than  it  once  was  without  the 
tariff.  But  the  cheapening  of  all  metals,  protected  and  un- 
protected, is  held  to  depend  on  the  advance  of  the  science 
and  the  arts  of  metallurgy.  The  cheapening  of  gold,  a 
metal  out  of  the  range  of  tariff,  is  due  to  improved  pro- 
cesses of  contraction,  and  the  change  threatens  to  subvert 
the  monetary  basis  of  the  world's  credit  and  trade.  Metals 
which  have  been  cheapened  in  the  United  States  have  been 
similarly  affected  in  England.  It  is  not  clear  that  the  tariff 
in  this  matter  holds  any  important  relation  of  cause  to  ef- 
fect. Nor  would  the  general  policy  of  taxing  one  group  of 
men,  or  even  one  generation  for  the  benefit  of  the  next,  be 
justified  if  it  were  so. 

The  tariff'  is  defended  on  the  ground  of  the  value  to  the 
growing  nation  of  the  advancement  of  infant  industries — of 
the  development  of  diversified  economies.  We  may  not 
deny  the  importance  of  such  development.  We  may  ad- 
mit that  at  many  places  and  for  definite  periods  there  has 
been  a  financial  gain  to  the  community  at  large,  thru  taxing 
the  farmer  to  build  up  the  manufacturer.  We  may  admit 
that  nation  building  has  been  hastened  by  it.  But  for  all 
that  it  is  not  politically  right  nor  just  to  do  this,  for  the 
gain  to  one  has  gone  with  loss  to  others.  The  policy  in 
practice  assumes  the  form  of  a  vested  right  which  becomes 
in  time  a  vested  wrong.  But  even  if  we  admit  the  past 
value  of  protection,  the  greater  evil  comes  when  we  cannot 
let  go.  Around  these  vested  rights  other  conditions  grow 
up,  and  a  change  of  any  sort  works  havoc  with  related  or 
associated  interests.  Justice  to  the  new  interests  becomes 
possible  only  by  the  perpetration  of  varied  forms  of  in- 
justice. To  touch  the  tariff  in  any  way  now  sends  a  shock 
thru  the  financial  world,  throuout  the  body  politic.  Tariff 
revision  in  our  day  is  therefore  an  operation  which  can  be 
based  on  no  principles.  It  is  a  blind  rush  among  various 
choices  of  evils.  To  put  revision  in  the  hands  of  friends  of 
the  tariff  means  still  suppression  of  reform,  the  further  ex- 
tension of  the  evil  itself.  To  put  revision  into  other  hands 
means  a  commercial  crisis.     And  sooner  or  later  commercial 


136  FREE  TRADE  AND 

crisis  must  come.  The  only  permanence  lies  in  making  tariff 
taxation  like  other  taxation,  a  non-respecter  of  persons,  its 
sole  function  that  of  raising  revenue.  Justice  is  always 
blind,  knowing  nothing  of  indirect  or  ulterior  advantages. 

Historically,  the  theory  of  the  infant  industry  has  proved 
fallacious.  There  are  in  America  today  no  infant  indus- 
tries. These  infants  have  grown  more  rapidly  than  the 
nation  has.  Our  huge  industrial  combinations  overshadow 
the  world.  Just  as  in  their  alliance  they  dominate  us,  in 
similar  degree  they  have  the  whip  hand  over  other  nations. 
If  anything  American  can  take  care  of  itself,  it  is  our  in- 
fant industries.  Yet  these  organizations  demand  the  tariff 
as  a  necessity  of  existence  as  insistently  as  ever  they  did. 
They  exact  tribute  from  all  of  us,  because  they  can  get  it. 
The  lull  in  the  self-assertion  just  at  present  is  due  to  the 
handwriting  on  the  wall,  not  to  any  lessening  desire  to  be 
fed  at  the  public  expense. 

The  actual  injury  to  American  prosperity  traceable  to 
the  tariff  may  not  be  enormously  great.  It  has  doubtless 
been  exaggerated,  It  lends  itself  to  exaggeration.  It 
makes  us  angry  when  we  think  of  it,  and  wrath  carries 
always  a  magnifying  glass.  Its  greatest  evil  is  moral,  not 
economic.  It  lies  in  the  perversion  of  our  theories  of  gov- 
ernment, the  introduction  of  the  idea  of  class  enrichment 
thru   legislation. 

Doubtless  much  of  the  prosperity  of  the  United  States 
is  due  to  the  protective  tariff — the  prosperity  of  some  of 
us.  But  in  like  degree  the  non-prosperity  of  some  of  us, 
some  of  the  verj^  same  .persons,  for  that  matter,  is  due  to 
the  same  national  meddling  with  individual  rights.  The  ap- 
parent prosperity  of  any  community  could  be  greatly  en- 
hanced by  taking  i  property  away  from  half  the  people  to 
put  it  into  the  hands  of  the  others  who  know  better  how 
to  use  it.  Some  of  this  sort  has  lain  at; the  foundation  of 
British  polity.  It  is  the  theory  by  which  nobility  and 
aristocracy  justify  themselves.  It  is  not  the  theory  of 
democracy.  It  is  not  the  principle  on  which  our  nation 
was    founded.     Thus,    behind    all    discussion    of    sources    and 


1 


PROTECTIOX  137 

means  of  prosperity  the  fact  remains  that  democratic  jus- 
tice, that  fundamental  equity  between  man  and  man,  can 
never  be  realized  in  America  so  long  as  any  trace  of  the 
protective  tariff  remains  on  our  statute  books.  It  is  an- 
other illustration  of  the  truth  that  "they  enslave  their 
children's  children  who  make  compromise  with  sin."  This 
law  applies  to  economic  lapses,  to  time-serving  'legislation, 
as  well  as  to  moral  sins. 


Westminster  Review.   164:   124-34.   August,   1905. 

Re-statements   of   Economic  Tendencies.     David    H.  Wilson. 

When  the  average  elector  is  called  upon  to  give  an  opin- 
ion on  the  Tariff  question  he  has  but  a  vague  perception  of 
the  principle  of  Protection,  of  the  conditions  involved  in 
its  culture,  and  of  its  far-reaching  tendencies.  For  (i)  he 
is  misled  by  the  term  "Fiscal  Reform";  (2)  his  mind  is 
diverted  from  the  responsibility  of  disturbing  the  natural 
play  of  economic  principles  that  have  long  and  successfully 
stood  the  test  of  experience,  by  being  told  that  the  pro- 
posed tariffs  involve  only  partial  changes,  the  burden  of 
which  would  fall 'upon  the  foreigner.  At  the  same  time  he 
is  alarmed  by  the  cry  of  the  so-called  Fiscal  Reformer  that 
the  re-adjustment  of  Tariffs  demands  our  immediate  atten- 
tion, if  we  would  avert  a  national  catastrophe.  (3)  He  is 
told  that  such  changes  would  produce  certain  effects,  with- 
out being  shown  the  causal  relation  between  them.  The 
effects  are  said  to  be  specially  advantageous  to  producers, 
who,  desirous  of  securing  any  extra  gain,  accept  such  as- 
surance without  critical  inquiry  as  to  its  justification.  Oth- 
ers, too, 'as  the  friends  of  producers,  approve  the  changes 
proposed,  and  are  less  critical  because  of  their  remoter  in- 
terest. Others,  again,  with  no  direct  interest  as  producers, 
are  not  opposed  to  taxation '  of  the  necessaries  of  life,  on 
the  ground  that  such  a  measure,  falling  (as  it  is  alleged) 
equally  upon  all  classes,  would  so  enrich  the  Exchequer 
that   it    would   probably   have    the    effect   of   reducing    direct 


X38  FREE  TRADE  AND 

taxation  on  income,  which  makes  the  proposals  appeal  to 
their  own  interests.  And,  further  (4)  it  is  asserted  that 
political  economy  is  an  elastic  science,  which  should  be 
adapted  to  the  changes  of  circumstances,  and  therefore 
that  its  principles  vary  with  the  times.  In  other  words, 
that  there  are  principles  which  belong  to  no  science;  or  that 
there  is  a  science  which  has  no  principles. 

Under  these  circumstances,  it  may  serve  a  useful  pur- 
pose to  re-state  some  of  the  simpler  issues  of  Protection, 
and  to  indicate  some  of  the  fallacies  concerning  the  ten- 
denc}-  of  economic  laws.  This  inquiry  will  show,  we  be- 
lieve, that  the  true  science  of  exchange  is  based  upon  prin- 
ciples which  liave  ]jeen  either  misstated,  or  lost  sight  of,  by 
those  who  pretend  that  the  effects  of  economic  laws  may 
be  determined,  and  regulated,  by  legislation. 

It  seems  superfluous  to  point  out  that  the  proposals  of 
Tariff  Reform  are  Fiscal  only  in  name,  since  those  of  their 
advocates  who  have  the  courage  to  speak  plainly  have  ex- 
presslj-  stated  that  they  are  intended  at  the  same  time  to 
"protect"'  home  industries,  and,  therefore,  to  benefit  the 
country  at  large. 

Now  these  two  designs — taxing  for  revenue,  and  taxing 
for  "Protection," — are  mutually  opposed;  for  it  is  clear  that 
the  interest,  simply,  of  the  Exchequer  is  to  secure  as  large 
a  revenue  as  possible  to  meet  the  necessities  of  the  state, 
which  in  a  country  with  large  expenditure  can  only  be 
done  by  high  taxation.  On  the  other  hand,  it  is  the  in- 
terest of  the  producer,  as  a  producer,  to  be  taxed  as  .lightly 
as  possible,  so  that  he  may  turn  out  his  commodities  as 
cheaply  as  ipossible.  He  has  some  control  over  their  cost 
of  production  by  the  labour-saving  appliances  he  may  em- 
ploy, his  resources  of  economical  administration,  his  skill  in 
utilising  waste  products,  and  so  on;  but  simply  as  a  pro- 
ducer he  has  no  control  over  market  prices.  These  latter, 
depending  upon  supply  and  demand,  are  determined  with- 
out him.  But  it  is  said  that  Protection  will  give  him  that 
control;  it  will  limit  competition  for  his  benefit.  If  then 
the   state   will   benefit,   and   the   producer   will   benefit,   out   of 


PROTECTION  139 

whose  pocket  will  these  gains  come?  The  producer  will  not 
gain  by  simply  adding  the  amount  of  the  tax  to  the  original 
cost  of  his  commodities  (including  his  original  profit).  To 
gain  by  the  protective  tax  he  must  add  an  extra  profit,  and 
this  extra  profit   can   only  be  paid  by  the   consumer. 

So  the  public  at  large  would  pay  not  only  the  fiscal 
tax,  but  also  the  interest  on  it  to  the  producer  for  having 
advanced  its  payment,  and,  in  addition,  his  extra  profit. 

When  the  public  pay  a  genuine  fiscal  tax — that  is,  a  tax 
for  revenue,  they  effect  an  exchange  of  services  with  the 
state.  In  exchange  for  the  amount  of  the  tax,  the  state  gives 
them  the  service  of  maintaining  public  order,  of  protecting 
property  and  person,  of  cheap  postage,  and  so  forth.  But 
to  whatever  extent  they  pay  more  than  this — that  is,  give 
more  than  service  for  service,  they  pay  so  much  for  noth- 
ing. They  gain  nothing  from  the  producers,  for  the  latter 
give  them  neither  more  nor  better  commodities  than  they 
obtained  before  the  Protective  tax.  Indeed,  the)'  are  losers, 
for,  by  contributing  to  the  restriction  of  competition,  the)' 
actually  enable  producers  to  create  monopolies,  and  so  to 
enter  into  combinations  against  them.  A  Protective  tax, 
then,  tends  to  disturb  the  natural  economic  laws  which  de- 
termine prices;  for,  by  increasing  the  price  of  commodities 
it  tends  to  diminish  the  demand  for  them,  and  bj'  restricting 
competition  it  tends  to  diminish  their  supplj'. 

Is  it  necessary  to  point  out  that  if  Protection  be  accord- 
ed to  one  industry,  it  must  be  accorded  to  many,  if  not  all, 
industries?  Is  not  the  continually  extending  field  of  taxa- 
tion in  protected  countries  a  proof  of  this?  And  this  must 
be  noted,  that  as  the  number  of  protected  industries  in- 
creases, so  each  producer  is  more  and  more  injured;  be- 
cause producers  are  also  consumers,  and  so  have  to  paj' 
more  for  all  the  things  they  need  which  they  do  not  them- 
selves produce;  and,  further,  as  capitalists,  they  will  have  to 
paj'  in  the  long  run  higher  wages,  since  those  in  their  employ 
are  also  consumers,  and  are  injured  from  the  same  cause  as 
themselves. 

Does  the  average  elector  who  is  willing  to  pay  a  tax  on 


140  FREE  TRADE  AND 

bread  under  the  impression  that  he  will  be  thereby  aiding 
the  British  farmer,  realise  that  the  bread  tax  will  infallibly 
lead  to  other  taxes  which  will  in  the  end  force  him  to  pay 
more  for  all  the  necessaries  and  enjoyments  of  life? 

But  we  are  told  that  if  food  be  taxed  wages  will  rise, 
and,  therefore,  with  higher  wages  the  worker  will  possess 
a  larger  purchasing  power.  This  statement  asserts  that 
the  wage  earner  after  the  imposition  of  such  taxes  will  be 
able  to  purchase  a  larger  j  number  of  commodities  than  be- 
fore such  imposition.  We  shall,  however,  show  that  the 
subject  is  only  partially  viewed;  that  the  assumption  is 
based  upon  a  fallacy;  and  that  the  true  tendency  of  the 
economic  laws  at  work  is  lost  sight  of.  Let  us  consider 
the  matter.  The  statement  that  if  food  be  taxed  wages 
will  certainly  rise  out  of  proportion  to  the  rise  occasioned 
by  taxation,  assumes  that  the  rate  of  wages  is  based  upon 
the  price  of  food,  independentlj^  of  other  considerations. 
This  is  a  generalisation  which  is  fallacious.  Wages  are 
determined  by  the  relation  of  demand  for  labour,  to  sup- 
ply of  labour.  When  the  demand  is  greater  than  the  sup- 
ply, wages  are  high.  When  demand  for  and  supply  of  la- 
bour are  equally  balanced,  wages  are  natural  or  average. 
When  the  supply  exceeds  the  demand,  the  wages  that  ob- 
tain are  minimum  wages.  A  minimum  wage  is  that  return 
for  labour  which  just  enables  the  worker  to  live,  clothe,  and 
house  himself.  It  will  be  seen,  therefore,  that  the  price  of 
food  is  only  one  of  the  factors  which  determine  wages.  In 
what  way  is  it  a  factor  at  all?  In  the  case  where  wages 
are  high,  or  average,  the  prices  of  the  necessaries  of  life 
affect  them  indirectly.  If  there  should  be,  from  any  cause, 
only  a  slight  increase  in  the  price  of  food,  wages  would 
fall,  because,  so  long  as  there  is  a  sufficient  margin  of 
wages  above  the  minimum  wage  (the  ratio  of  demand  for 
and  supply  of  labor  being  constant,  the  burden  of  any  in- 
crease in  the  price  of  food  must  be  met  out  of  that  margin 
and  so  fall  on  the  wage  earner.  The  purchasing  power  of  the 
wages  after  the  rise  in  the. price  of  food  would  be  less  than 
before    such    rise — that    is,    wages    would    fall.     But    suppose 


I 


PROTECTION  141 

that  from  any  cause  the  prices  of  the  necessaries  of  life 
were  so  increased  as  to  force  the  emigration  of  labour  from 
the  country,  or  from  one  industry  to  another,  then  this  emi- 
gration, by  diminishing-  the  labour  supply,  would  tend  to 
raise  wages;  this  effect  being  also  an  indirect  one.  So 
taxation  of  the  necessaries  of  life  in  these  cases  tends 
either  to  cause  wages  to  fall,  oi;  to  rise  at  the  expense  of 
displacing  labour,  and  thus  disorganising  the  labour  market. 
We  may  in  passing  remark  that  this  displacement  is  an  in- 
jurious displacement,  and  must  not  be  confounded  with  the 
liberation  of  labour  consequent  upon  the  introduction  of 
machinery.  For,  in  the  latter  case,  the  economy  of  labour 
is  balanced  by  the  economy  effected  of  capital,  so  that  the 
labour  freed  from  an  industry  by  the  introduction  of  ma- 
chinery reaps,  in  one  way  or  another,  in  the  general  labour 
market,  the  benefit  of  the  capital,  which,  being  economised 
by  the  same  cause,  is  also  freed. 

Unless  we  could  by  legislation  regulate  population  and 
restrain  the  liberty  of  individuals  we  could  not  by  any  arti- 
ficial arrangement  maintain  high  wages,  for  the  natural 
economic  law  is  always  ^t  work  that  there  is  a  constant 
tendency  for  labour  to  flow  into  markets  where  high  wages 
obtain.  So,  too,  there  is  a  constant  tendency  for  labour  to 
flow  out  of  markets  where  very  low  wages  obtain  in  search 
of  more  remunerative  employment.  Hence,  both  these  in- 
fluencies  tend  to  establish  in  every  branch  of  industry  by 
the  law  of  supply  and  demand  a  natural  or  average  wage. 
In  the  case,  however,  where  wages  are  at  a  minimum  rate 
an  increase  in  the  price  of  the  necessaries  of  life  would 
raise'  wages  directly,  for  if  it  had  not  that  effect — if,  that  is 
to  say,  the  wage  earner  had  to  bear  the  increased  burden — 
his  wages  would  fall  below  the  minimum,  which  is  impos- 
sible, since  below  the  minimum  wage  he  could  not  live.  To 
what  extent  then  does  the  increased  cost  of  living  increase 
his  wages?  and  out  of  whose  pocket  does  this  increase 
come?  By  a  simple,  illustration  we  can  answer  this  ques- 
tion. Suppose  a  farm  labourer  to  earn  a  minimum  wage  of 
155.  a  week.     By  a  tax  on  food  his  cost  of  living  is   raised 


142  FREE  TRADE  AND 

from  15s.  to  i8s.  a  week.  His  wages,  therefore,  must  rise 
3s.,  which  will  be  paid  in  the  first  instance  by  his  employer, 
and  ultimately,  of  course,  by  the  consumer.  But  the  wage 
earner  would  be  no  better  off  than  he  was  before.  The 
minimum  wage  would  have  risen,  but  it  would  still  only 
supply  his  absolute  necessities.  As  a  tax  on  food  is  advo- 
cated by  many  as  a  tax  for.  revenue,  it  may  be  well  to  note 
what  this  extra  3s.  (which  comes  out  of  the  consumer's 
pocket)  comprehends.  It  certainly  does  not  all  go  into 
the  Exchequer — even  allowing  for  cost  of  collection.  This 
3s.  is  the  fiscal  tax  on  foods  paid  by  the  original  producers, 
plus  interest  on  it  to  all  the  intermediary  distributors  be- 
tween them  and  the  consumer.  Thus,  the  farmer  who  ad- 
vances the  tax  on  corn  has  to  charge  interest  on  such  ad- 
vancement to  the  miller;  the  miller  has  to  charge  the  baker 
interest  on  the  advance  which  he  has  paid  to  the  farmer; 
and  the  baker,  having  paid  the  tax,  plus  the  farmer's  and 
miller's  interest,  has  to  charge  interest  on  his  adA'ance  to 
the  consumer.  So  the  consumer  pays  the  fiscal  tax  to  the 
state,  and,  in  addition,  other  impositions  for  which  he  gets 
in  exchange  no  services  whatever.  We  have  shown  that, 
in  the  case  of  high  and  average  wages,  a  tax  on  food,  act- 
ing indirectly,  would  lower  wages  by  reducing  their  relative 
purchasing  power — a  reduction  which  would  not,  of  course, 
benefit  the  employers.  This  could  only  happen  so  long  as 
the  labour  market  was  undisturbed.  But  such  disturbance 
would  certainly  be  produced  by  an  all-round  taxation  of  the 
necessaries  of  life:  and,  indeed,  partial  taxation  of  this  na- 
ture would  always  toid  to  produce  such  disturbance.  If 
the  farmer  is  to  gain  by  taxation  of  a  food  he  produces  it 
must  be  by  an  appreciable  taxation  that  falls  also  upon  all 
substitutes  for  that  food.  So  a  disturbance,  created  in  the 
ratio  of  demand  for  and  supply  of  labour  by  increasing 
the  cost  of  living,  would  as  Adam  Smith  puts  it,  "by  raising 
the  wages  of  labour,  necessarily  tend  to  raise  the  price  of 
all  manufactures." 

The  position   of  the  farmer  is  well   stated  in  a   work  by 


I 


PROTECTION  143 

Mr.  Drummond,  the  founder  of  the  Chair  of  Political  Econ- 
omy in  the  University  of  Oxford.     He  says: 

"It  is  the  interest  of  all  capitalists  to  have  the  necessaries  of 
life,  and  consequently  corn  amongst  the  rest,  cheap,  because 
their  labourers  will  then  be  contented  with  lower  wages.  A  farm- 
er's gain  cannot  be  permanently  greater  than  that  of  other  capi- 
talists. Even  during  the  currency  of  a  lease,  a  rise  in  the  price 
of  corn  is  not  always  an  advantage  to  him:  for  if  there  be  a 
general  rise  in  the  price  of  all  other  commodities  also  at  the 
same  time,  he  must  give  a  corresponding  increased  price  for  his 
coats,  hats,  horses,  sheep,  cattle,  &c.,  and,  unless  during  the 
currency  of  a  lease,  he  has  no  interest  whatever  in  high  prices, 
because  competition  will  effectually  prevent  him  from  deriving 
more  than  a  very  temporary  advantage  from  them.  He  has,  how- 
ever, in  common  with  all  other  capitalists,  a  very  strong  interest 
in  high  profits;  and  it  is  not  possible  that  profits  should  be  high 
for  a  long  period  together,  when  the  necessaries  of  life  are  dear. 
A  high  price  of  corn  therefore  not  only  is  not  beneficial  to  the 
farmer  as  such,  but  it  is  positively  injurious  to  him.  He  is  In- 
jured in  two  ways:  first  as  a  consumer  of  corn  with  the  rest  of 
the  community,  by  having  to  consume  a  dear  instead  of  a  cheap 
commodity;  and  secondly,  he  is  injured  in  a  still  greater  degree, 
as  an  owner  of  capital,  by  being  compelled  to  give  high  wages  to 
all   the   labourers   he   employs." 

We  are  told  that  the  foreigner  "dumps"  his  goods  on 
our  markets,  but  does  not  take  our  goods  in  exchange  for 
them,  but  instead  impoverishes  our  country  by  carrying  off 
our  money.  But  what  of  that?  He  does  not  steal  our 
money — and  this  is  the  point  that  is  lost  sight  of.  He  buys 
our  money:  in  other  words,  he  exchanges  his  services  for 
services  which  others  have  exchanged  for  ours.  Suppose 
A.  agrees  with  his  employer  B.  that  he  will  give  B.  so 
much  of  his  services  in  overtime,  if  B.  in  exchange  for  such 
services  will  give  him  100  British  cigars.  When  the  work 
is  done,  B.,  instead  of  giving  A.  100  cigars,  gives  him  20s., 
the  money  value  of  them.  That  money  represents  a  chain 
of  services  of  indefinite  length,  of  which  the  last  term  is 
B.'s  service  to  A.,  or  otherwise,  potential  cigars.  A  for- 
eigner appears  upon  the  scene  with  100  foreign  cigars, 
whicli,  price  for  price,  are  of  better  value  than  British- 
made  cigars,  and  he  offers  them  to  A.  for  20s.  A.  exchanges 
his  money  (potential  cigars)  for  the  foreign  cigars,  and  the 
foreigner  departs  with  the  coin  to  his  native  land.  Here  is 
a  case  of  "dumping"  a  foreign  commodity  on  the  British 
market,  of  no  British  goods  being  taken  in  exchange  for 
it,   and    of   British   money   being   taken    out   of   the    country. 


144  FREE  TRADE  AND 

But  who  is  any  the  worse  off  for  it?  Certainly  not  A.,  the 
British  subject,  for  he  has  got  better  cigars  for  the  same 
money.  So  far  as  he  is  concerned,  he  stands  in  the  same 
position  as  if  B.  had  paid  him  for  his  overtime  in  British 
cigars,  which  he,  A.,  had  afterwards  exchanged  with  the 
foreigner  for  the  better  foreign  ones — in  which  case  the 
inferior  cigars  (instead  of  money)  would  have  gone  out  of 
the  country.  Since,  however,  commerce  could  not  rest  on 
such  unstable  foundations  as  unequal  and  arbitrary  ex- 
changes, there  could  be  no  prevalence  of  such  cases,  and 
therefore  A.  would  gain  by  exchanging  in  money,  and  not 
in  kind. 

But  it  will  be  objected  that  this  foreign  "dumping"  ruins 
the  trade  of  British  cigar-makers.  If  foreign  cigars  are 
superior  to  British-made  ones,  and  if  the  foreigner  is  al- 
lowed a  free  market  for  his  goods  here,  who  would  buy  the 
home-made  article?  It  is  just  this  line  of  thought  that 
makes  Protectionists.  Self-interest  will  make  a  Pro,tec- 
tionist  of  the  cigar-maker;  and  other  producers,  placing 
themselves  in  imagination  in  his  position,  will  go  over  to 
his  views.  Protection  then  is  the  armour  which  the  pro- 
ducer looks  to  to  guard  him  from  foreign  competition,  and 
in  the  measure  that  it  so  protects  his  interest  it  acts  against 
the  interest  of  the  consumer,  which  lies  in  buying  the  'best 
commodities  in  the  cheapest  markets.  There  is  only  one 
way  whereby  British  producers  may  shut  out  foreign  com- 
petition, and  at  the  same  time  guarantee  to  the  British  con- 
sumer all  the  advantages  of  exchange  which  he  expects,  and 
is  entitled  to,  and  that  is  by  supplying  him  with  commodi- 
ties at  least  as  good,  and  at  least  as  cheap,  as  the  foreigner 
can  offer.  Let  consumers  once  understand  this,  and  they 
will  know  what  to  think  when  the  producing  class  tri^s  to 
persuade  them  that  the  public  weal  may  be  better  secured 
by  closing  our  markets  to  foreign  competition.  But  we 
are  told  that  foreigners  "dump"  on  us  commodities  that 
are  inferior  to  our  own.  So  Protection  is  intended  to  pro- 
tect consumers,  no  less  than  producers:  to  prevent  the  pub- 
lic  from   purchasing  inferior   goods,   even   though   cheap,   by 


PROTECTIOX  145 

shutting  all  such  cheap  and  nasty  commodities  (of  foreign 
make)  from  our  markets!  In  other  words,  it  is  proposed 
to  regulate  and  limit  the  wants,  desires,  and  tastes  of  the 
community  by  legislation :  and  it  is  to  this  reductio  ad  ab- 
surdum  that  the  theory  of  restriction  logically  leads.  The 
fact  that  foreign  commodities,  bad,  good,  cheap,  or  dear, 
are  "dumped"  upon  our  markets,  shows  that  British  con- 
sumers want  them.  When  we  no  longer  want  them,  they 
will  be  "dumped"  no  more.  Political  economy  has  to  do 
with  the  principles  which  govern  the  working  of  the  me- 
chanism Man-in-a-soci'al-state.  The  Protectionist,  like  a 
quack-doctor,  pretends  tliat  he  can  make  that  machine 
work  better  than  Nature  can,  by  substituting  for  her  prin- 
ciples some  nostrums  of  his  own.  But  natural  laws  are  al- 
ways endeavoring  to  assert  their  authority,  and  the  more 
they  are  opposed  by  artificial  obstacles,  the  more  disas- 
trous will  this  conflict  be  to  the  machine. 

The  assertion  that  a  tax  on  exports  would  be  paid  by 
the  foreigner,  while  we  should  gain  the  advantage  of  it  as 
revenue,  is  based  upon  the  assumption  that  such  tax,  al- 
though making  our  commodities  dearer  to  the  foreign 
importer,  by  the  amount  of  the  tax  (and  something  in  addi- 
tion by  way  of  interest  on  his  additional  outlay),  would  not 
diminish  our  export  trade.  But  this  is  opposed  to  the  ele- 
mentary principle  of  economics  that  every  tax  on  com- 
modities, by  raising  their  price,  tends  to  lessen  the  demand 
for  them.  It  is  as  much  to  our  interest  to  "dump"  cheap 
commodities  on  foreign  markets,  as  it  is  to  foreigners  to 
"dump"  them  on  ours.  We  make  many  things  in  England 
better  than  they  make  them  in  France — at  any  rate  we 
think  we  do,  and  the  French  think  so  too,  and  buy  them 
largely,  notwithstanding  the  obstacles  the  French  Govern- 
ment puts  in  their  way  in  the  form  of  heavy  import  duties. 
If  it  were  not  for  these  duties  we  should  do  a  much  larger 
business  with  the  French  people.  Protection  proposes  to 
improve  this  business  by  placing  another  obstacle  on  our 
goods,  in  the  shape  of  an  export  duty,  and  so  increase  their 
price  to  the  Frenchman. 


146  FREE  TRADE  AXD 

Dcarness  of  imported  commodities  is  the  stimulus  for 
making  them  at  home.  "Quite  so,"  says  the  Protectionist, 
"let  us  make  our  imports  dear,  and  that  will  stimulate  our 
home  manufactures."  So  after  all,  the  proposed  tax  on 
exports  is  not  so  much  for  revenue,  as  to  afford  an  argu- 
ment for  taxing  imports.  But  if  it  be  said  that  a  tax  on 
imports  would  augment  revenue,  as  well  as  protect  home 
industries,  we  reply  that  the  revenue  would  gain  nothing 
unless  all  commodities  were  taxed,  as  well  those  which 
we  make  at  home  as  those  of  the  same  kind  that  we  import. 
For  if  a  box  of  matches  "made  in  Germany"  were  to  cost 
here  twopence,  because  of  an  import  tax,  and  a  similar 
article  equally  good  made  here  were  to  cost  one  penny  be- 
cause not  taxed,  it  is  clear  that  no  German  matches  would 
be  imported,  and  therefore  no  revenue  would  come  in  from 
that  source.  So  the  taxing  of  exports  tends,  by  increasing 
their  price,  to  reduce  the  consumption  of  them  abroad,  and 
therefore  the  output  of  them  at  home;  and  the  taxing  of 
imports  means  that  the  burden  of  such  taxation  (involving 
as  it  would  taxation  of  all  home-made  commodities  of  the 
same  kind,  and  so  raising  their  price)  would  fall  upon  the 
consumer,  whose  purchasing  power  in  other  directions 
would  be  thereby  so  much  diminished. 

Let  us  now  consider  the  assertion  that  Political  Economy 
is  an  elastic  system,  which  should  be  adapted  to  the  changes 
of  circumstances,  and  therefore  that  its  principles  vary  with 
the  times. 

There  are  two  natural  desires  in  man  with  opposite 
tendencies  which  have  much  the  character  of  appetites, 
since  they  arise  spontaneously,  and  are  satisfied  by  the  acqui- 
sition of  their  object — these  are  the  desire  of  bodily  exercise 
and  the  desire  for  bodily  rest.  Similarly,  there  are  two 
mental  tendencies  opposed  to  one  another,  namely,  the 
longing  to  progress  and  acquire  new  experiences,  and  the 
longing  to  cling  to  old  associations.  As  these  are  human 
tendencies  they  are  not  peculiar  to  any  political  party,  but 
are  common  to  us  all.  The  assertion,  therefore,  that  if  we 
do   this    and   not   that   we    shall   not   be    marching   with    the 


I 


PROTECTION  147 

times  but  be  going  backwards,  offends  the  imagination  by 
shocking  a  universal  susceptibility.  If  a  man  on  a  raft  be 
suddenly  told  by  one  who  has  his  confidence  that  he  is  not 
on  a  raft  but  is  standing  on  a  quicksand,  he  will  accept  any 
proposal  for  securing  his  safety  without  criticising  it.  Simi- 
larly, when  we  are  accused  of  going  backwards  the  rebuke 
is  so  disconcerting  that  we  are  prone  to  accept  the  first 
remedy  offered  before  troubling  to  satisfj-  ourselves  whether 
or  not  the  charge  is  true.  But  who  can  seriously  assert  that 
the  system  of  Protection  belongs  to  a  new  order  of  prog- 
ress, and  that  that  of  Free  Trade  belongs  to  an  old  order? 
In  the  earliest  times  of  barter,  no  Free  Trade  was  possible; 
for  the  cumbersome  machinery  of  exchange,  the  only  par- 
tial division  of  labour  obtaining,  the  strong  tribal  antipa- 
thies, and  the  self-sufficiencies  of  communities,  were  them- 
selves Protective  restrictions.  As  late  as  1670,  by  a  regula- 
tion of  the  French  Government,  rules  were  laid  down  as  to 
who  should  be  allowed  to  w^ork,  what  things  it  should  be 
permitted  to  make,  what  materials  should  be  employed, 
what  processes  should  be  followed,  what  forms  should  be 
given  to  production.  Machines  were  broken,  products  were 
burned  when  not  conformable  with  the  rules,  inanufacturers 
who  produced  them  were  attached  to  the  pillory  and  inven- 
tors were  fined.  There  were  different  sets  of  rules  for 
goods  destined  for  home  consumption  and  for  those  intend- 
ed for  exportation.  An  artizan  could  neither  choose  the 
place  in  which  to  establish  himself,  nor  work  at  all  seasons, 
nor  work  for  all  customers.  This  state  of  aft'airs  was  con- 
firmed by  further  decrees,  and  was  continued  down  to  the 
Revolution.  (See  M.  Dunoyer  On  flic  Liberty  of  Labour,  and 
Carey's  Essay  on  the  Rate  of  JVagcs.) 

How  has  France — which  is  still  one  of  the  most  highly 
"Protected"  countries  in  the  world — reformed  since  those 
times?  By  shaking  off  some  oi  the  fetters  of  a  meddlesome 
and  vexatious  interference  with  the  liberty  of  individuals 
and  the  play  of  natural  economic  principles.  How  has  Eng- 
land reformed  since  the  old  days  of  Protection?  By  shak- 
ing  off   all   such    fetters.     It'  is    England    that    has   broken    the 


148  I'RRE  TRADE  AND 

shackles  of  Paternal  Government;  the  countries  that  are 
still  "Protected"  are  still  in  its  grip.  We  can  send  a  letter 
in  this  country  to  the  Antipodes  for  one  penny.  In  France 
it  still  costs  fifty  per  cent,  more  to  send  one  from  one 
house  to  the  house  next  door  to  it.  Before  1840,  the  post- 
age of  a  missive  of  a  single  sheet  from  London  to  Edin- 
burgh cost  IS.  yyjd.  It  would  be  as  logical  to  say  that  we 
should  be  moving  with  the  times  by  going  back  to  the 
dear  postage  tariffs  of  protected  countries,  which  have  yet 
in  that  respect  been  standing  still,  as  to  affirm  that  we 
should  be  moving  with  the  times  by  going  back  to  Protec- 
tion. Protection,  in  the  history  of  the  commerce  of  the 
civilised  world,  came  first  in  one  or  other  form.  If  the 
modern  form  be  a  reform  it  is  so  only  in  the  sense  that  one 
method  of  restricting  individual  liberty  may  be  less  violent 
than  another,  as  the  procedure  of  a  tax-collector  is  less 
violent  than  that  of  a  highwayman.  In  its  essence  it  is  a 
primitive  form;  and  Free  Trade  being  the  casting  off  by  a 
liberty-loving  people  of  restrictive  burdens  is  the  reform. 
Again,  the  assertion  that  Political  Economy  is  a  system 
that  can  be  adapted  to  changing  circumstances  involves  a 
fallacy.  The  fallacy  lies  in  the  implication  that  economic 
laws  are  the  effect  of  circumstances;  the  truth  being  that 
laws  are  neither  causes  nor  effects  of  anything,  and  that 
Political  Economy  has  nothing  to  do  with  circumstances 
independently  of  human  beings.  It  is  because  this  science 
is  based  upon  human  nature,  upon  human  forces  w^hich 
bind  people  together;  upon  the  needs,  desires,  rights,  and 
obligations  of  individuals  in  the  social  state,  and  the  action 
and  reaction  between  them,  and  between  one  society  and 
another,  that  true  economic  principles  cannot  change,  and 
therefore  are  permanent.  The  character  of  their  perman- 
ence is  this — they  make  not  for  individual  interests,  but  for 
the  good  of  the  greatest  number;  and  therefore  are  in  ac- 
cord with  moral  principles.  "The  interest  of  consumers." 
said  the  great  French  economist  Bastiat,  "is  the  interest  of 
the  human  race."'  Fenelon  advocated  Free  Trade  from  the 
goodness    of   his    heart    long   before    economists    of   his    time 


PROTECTIOX  149 

dared  recommend  it.  What,  we  ask,  is  the  moral  sentiment 
that  inspires  Protection?  Protection  supplies  us  with  these 
terms:  Monopoly,  restriction,  scarcity,  retaliation,  rivalry, 
preference.  Free  Trade,  on  the  other  hand,  has  a  different 
vocabulary:  Co-operation,  liberty,  abundance,  reciprocal 
benefits,  competition,  justice.  These  terms  have  correspond- 
ing ideas,  and  these  ideas,  carried  out  in  practice,  indicate 
the  tendencies  of  their  respective  doctrines.  Would  it  be 
difficult  to  predicate  which  of  these  teachings  must  make 
for  the  happiness  of  mankind  at  large,  and  which  not? 
Which  tends  to  consolidate,  and  which  to  disintegrate  the 
social  fabric? 

Having  briefly  outlined  soine  of  the  bearings  of  Free 
Trade  and  Protection  from  a  near  view,  we  may,  in  finish- 
ing our  sketch,  step  back  a  little  and  take  a  general  survey 
of  our  subject. 

It  will  not  be  disputed  that  a  perfect  state,  as  far  as 
material  prosperity  is  concerned,  would  be  one  (i)  where 
there  were  no  taxes;  (2)  where  commodities  cost  nothing; 
and  therefore  (3)  where  no  labour  was  required  to  secure 
the  necessaries  and  enjoyments  of  life.  The  next  best  state 
would  be  one  in  which  taxes  were  as  few  as  possible;  the 
prices  of  commodities  as  low  as  possible;  and  therefore 
that  the  smallest  amount  of  labour  was  required  for  secur- 
ing the  necessaries  and  enjoyments  of  life.  Now  the  sys- 
tem under  which  there  are  the  fewest  taxes  is  that  where 
taxation  is  levied  solely  for  the  purpose  of  revenue.  Pro- 
tection, therefore,  does  not  belong  to  this  system,  and  is 
opposed  to  it,  for  it  imposes  taxes  not  only  for  revenue, 
but  for  other  purposes  as  well.  Free  Trade,  on  the  other 
hand,  favours  that  system  only  where  taxation  is  purely 
fiscal. 

Again,  the  lowest  prices  can  only  obtain  where  there  are 
no  artificial  limits  to  the  supply  of  commodities,  and  where 
there  is  free  competition  between  their  producers.  But  such 
a  state  is  opposed  to  Protection,  for  the  aim  of  that  sys- 
tem is  to  raise  prices  in  the  interests  of  producers  by  re- 
stricting  competition.     On    the    other    hand,    such    a    state    is 


I50  FREE  TRADE  AND 

favourable  to  Free  Trade,  which,  opposing  all  obstacles  to 
free  imports  and  free  exchanges,  seeks  to  cheapen  all  the 
needs  and  enjoyments  of  life.  Further,  the  system  where 
the  least  labour  is  necessary  to  secure  these  needs  and  en- 
joyments is  that  in  which  the  largest  amount  of  labour- 
saving  machinery  is  taken  advantage  of,  both  such  as  may 
be  found  at  home  and  such  as  may  be  utilised  by  exchange 
with  foreign  countries  (and  co-operation  and  skill  must  be 
included  as  labour-saving  factors),  and  also  that  system  in 
which  the  gratuitous  services  of  nature  are  the  most  largely 
and  most  freely  appropriated.  But  such  a  system  w'ould 
be  impossible  under  Protection,  which  is  favourable  to  the 
creation  of  monopolies,  and  therefore  unfavourable  to  co- 
operation. Moreover,  by  taxing  imported  manufacturers,  it 
taxes  skill,  and  by  taxing  imported  products  of  the  soil  it 
taxes  the  gratuitous  gifts  of  nature.  Free  Trade,  on  the 
contrary,  is  in  perfect  accord  with  such  a  system,  for  it 
discountenances  all  restrictions,  and  seeks  to  secure  every 
advantage  offered.  Hence  may  be  seen  the  relative  posi- 
tion of  Tree  Trade  and  Protection  respectively  to  the  con- 
ditions most  favourable  for  the  prosperity  of  mankind  from 
a  material  standpoint. 

There  are  two  principles  in  the  social  state,  the  one 
economic  and  the  other  moral,  which  appear  at  a  general 
glance  to  threaten  its  progress  and  integrity.  These  are 
the  rising  tendency  of  the  prices  of  commodities,  and  the 
natural  greed  of  human  nature  to  secure  individual  interests 
at  the  expense  of  those  of  the  community.  The  price  of 
commodities  may  rise  from  two  causes:  either  from  a  dimi- 
nution of  supply,  or  from  an  increase  of  demand.  The 
former,  which  would  be  injurious  to  the  general  public, 
since  their  interest  lies  in  well-filled  markets — would  be  the 
cause  of  dear  commodities  under  Protection,  whose  aim  is 
to  regulate  and  restrict  supplies.  The  latter  (an  increase 
of  demand)  would  be  the  cause  under  Free  Trade;  and  there 
being  no  artificial  limits  to  supplies,  but  every  encourage- 
ment for  their  increase,  an  increase  of  price  of  commodities 
under    this    system    would    be    itself    proof    of    the    growing 


I 


PROTECTIOX  151 

wealth  and  prosperity  of  the  community.  The  falling,  too, 
of  prices  may  have  an  unfavourable  aspect;  for  such  also 
may  happen  from  two  causes.  Prices  may  fall  either  from 
a  diminution  of  demand,  or  from  an  increase  of  supplies. 
Under  Protection  the  former  of  these  causes  would  ob- 
tain; for  taxation  of  commodities  (other  things  being  equal) 
must  tend,  by  artificially  raising  their  price,  to  diminish  the 
demand  for  them.  Whilst  Free  Trade,  by  opening  free  mar- 
kets for  all  commodities  would  tend  to  bring  about  a  fall  of 
prices  from  the  latter  cause — that  is,  from  an  increase  of 
supplies.  So  these  economic  tendencies  from  a  nearer  view 
are  seen  to  act  beneficially  under  Free  Trade,  but  injurious- 
ly under   Protection. 

With  regard  to  the  moral  force  mentioned,  which  threat- 
ens the  integrity  of  society,  it  will  suffice  to  saj'  that  al- 
though human  selfishness  and  other  disintegrating  forces 
attending  ignorance  and  greed,  may  be,  and  are.  at  work 
in  every  society  and  under  every  system,  there  is  a  counter- 
vailing principle — whether  it  be  called  an  innate  love  of  jus- 
tice, or  a  regard  for  expediency  derived  from  experience, 
which  makes  for  the  co-operation  of  individuals  for  the 
common  weal.  The  proof  of  this  is  the  fact  that  whilst 
individual  interests  are  centralising,  the  enjoyments  of  life, 
in  the  progress  of  the  world,  tend  to  become  more  and 
more  widely  diffused. 

We  affirm  that  this  tendency  which  counteracts  human 
weakness  can  only  be  generously  enlivened  and  urged  by 
that  economic  system  which  proclaims,  not  restriction,  but 
liberty  and  abundance,  not  retaliation,  but  reciprocity  of 
benefits,  not  preferences  and  favours  to  one  class  or  an- 
other, but  justice  to  all. 

Westminster    Review.    170:    22-7.   July,    1908. 

Policy  of  Free  Imports  and  the  Work-For-All  Argument  of 
Its    Opponents.     Harold   O.    S.   Wright. 

I  propose  in  this  article  to  discuss  the  virtues  of  free 
imports  from  this  theoretical  standpoint.     And  I   suggest  to 


152  FREE  TRADE  AND 

any  reader,  who  has  never  been  a  student  of  political  econ- 
omy, that  he  should  strive  to  free  his  mind  from  an  easy 
misconception  of  the  real  purposes  of  international  com- 
merce, engendered  by  the  use  of  tokens  of  value  (money  or 
bills),  and  begin  to  look  upon  it,  not  as  a  means  of  profit- 
making,  but  in  its  true  light  as  a  process  of  exchange. 


Conceive  of  three  persons  living  in  a  state  of  nature. 
Each  is  a  wool  grower  and  maker  of  cloth;  each  is  a  grain 
farmer;  each  is  the  manufacturer  of  his  own  tools.  So  that 
each  produces  for  himself  clothing,  food,  and  tools.  As 
time  goes  on,  the  three  men  recognise  that  in  one  of  them, 
owing  to  the  circumstances  of  his  situation  and  physical 
aptitudes  there  resides  a  peculiar  capacity  for  wool  and 
cloth  production,  in  another  a  special  skill  as  a  grain  farm- 
er, in  the  third  a  special  skill  as  a  tool  maker.  What  more 
advantageous  then  than  that  they  should  make  an  arrange- 
ment on  this  wise:  The  grain  expert  shall  produce  bread 
for  all  three,  one-third  of  that  bread  he  shall  keep,  one- 
third  hand  over  to  the  clothing  expert  in  exchange  for 
clothing,  one-third  to  the  tool  expert  in  exchange  for  tools. 
Similarly,  the  tool-maker  and  the  cloth-maker  shall  produce 
their  respective  commodities  in  quantities  sufficient  for  the 
three  and  exchange  their  surpluses. 

By  such  a  scheme  of  free  exchange  it  is  effected  that  the 
task  which  might  be  inefficiently  performed  by  one  man  is, 
by  natural  process,  shifted  on  to  the  shoulders  of  another 
man  so  situated  that  he  can  cope  with  it  efficiently,  who 
exchanges  part  of  the  produce  of  his  work  for  the  produce 
of  other  work  which  he,  in  turn,  is  not  so  efficient  to  per- 
form as  is  the  man  engaged  upon  it.  The  result  is  that, 
each  man  being  engaged  upon  the  task  for  which  he  has  a 
special  aptitude,  the  work  of  feeding  and  clothing  all  is  done 
more  easily,  more  efficiently,  and  in  less  time  than  if  each 
did  everj^  branch  of  that  work  for  himself. 

And  this  is  equally  true  if.  instead  of  individual  persons, 
whole   nations   are    substituted   as   the    parties    to    free    com- 


I 


PROTECTIOX  153 

mercial  exchange;  each  nation  will  be  engaged  upon  the 
different  branches  of  industry  b.est  suited  to  its  situation 
and  climate,  and  to  the  capacities  and  habits  of  its  people, 
and  will  exchange  the  surplus  of  its  industrial  products  for 
the  surplus  products  of  other  nations — this  process  tending, 
as  in  the  case  of  individuals,  to  efficiency,  and  to  a  saving 
of  labour  and  time. 

II. 

The  next  step  is  to  watch  the  effects  when  one  of  our 
three  persons — for  any  reason  whatever — fails  to  exchange 
his  own  produce  for  that  which  another  is  producing  more 
efficiently  than  he  can.  The  tool  expert,  for  example,  has 
to  do  without  the  bread  of  the  grain  expert,  to  do  without 
the  clothing  of  the  wool  expert,  and  produce  his  own  bread 
and  clothing.  This  result  cannot  be  anything  other  than 
a  disaster  for  the  tool  expert;  for,  inasmuch  as  by  exchange 
for  tools  which  he  could  produce  easily  he  can  no  longer 
obtain  bread  and  clothing,  he  is  forced  to  produce  them  for 
himself,  to  devote  time,  that  is,  to  work  for  which  he  is  not 
as  well  qualified  as  are  others;  the  consequence  being  that 
he  must  work  harder  than  when  he  was  acquiring  by  ex- 
change, and  yet  obtain  commodities  inferior  to  those  pre- 
viously obtained.  It  is  difficult  to  suppose,  in  view  of  this, 
that  any  individual  would  voluntarily  refuse  to  accept  the 
produce  of  his  neighbours.  Yet  this  course  is  exactly  what 
is  urged  by  the  Tariff  Reformers  as  likely  to  benefit  a  na- 
tion. 

But  of  a  nation,  as  of  an  individual,  it  is  true  that  the 
one  which  refuses  to  accept  from  the  stranger  goods  which 
are  more  efficiently  produced  than  are  similar  goods  made 
at  home — and  the  relative  cheapness  of  the  goods  in  the 
home  market  is,  of  course,  the  standard  for  measuring  the 
efficiency  of  production — must  spend  more  time  at  work 
and  produce  less  satisfactory  products  than  under  the  prac- 
tice of  exchange.  The  system  of  restricted  imports  increas- 
es the  total  volume   of  work   to  be   performed  by  a   nation, 


154  FREE  TRADE  AND 

and  at  the  same  time  prevents  its  members  from  obtaining 
the  best  products  of  the  world  as  the  result  of  that  work. 

No  doubt  the  shallow  minded  Tariff  Reformer  would 
consider  his  case  proved  by  an  admission  from  a  Free 
Trader  that  the  policy  of  restricted  imports  may  increase 
the  volume  of  work  to  be  done  by  the  members  of  the  na- 
tion. For,  says  he,  work  means  wages,  and  wages  mean 
wealth.  But  that  this  is  a  fallacy  is  easily  seen  from  the 
well  known  illustration  of  the  creation  of  work  by  the  wan- 
ton destruction  of  a  window  pane;  work  is  created  for  the 
manufacture  of  a  new  pane  and  its  erection,  and  wages  are 
paid  for  that  work,  but  there  is  no  increase  of  wealth;  the 
restored  window  is  only  of  the  same  value  as  it  was  before 
its  pane  was  wantonly  smashed;  all  that  has  happened  is 
that  labour  which  should  have  been  employed  upon  useful 
production  has  been  diverted  to  repair  the  useless  waste 
caused  by  an  act  of  mischief. 

The  truth  of  the  matter  is  that,  under  a  system  of  free 
imports,  the  nation  secures  at  least  an  equal  volume  of 
wealth  to  what  it  would  under  the  suggested  new  system, 
and  secures  it  with  a  smaller  expenditure  of  efifort.  This 
appears  manifest  when  the  statement  is  put  thus: 

The  people  of  nation  A,  working  eight  hours  a  day,  can 
produce  food  and  clothing  for  their  whole  nation;  working 
six  hours  a  day,  they  can  produce  food  for  their  own  nation 
and  for  nation  B. 

The  people  at  nation  B,  working  eight  hours  a  day,  can 
produce  food  and  clothing  for  their  own  nation;  working 
six  hours  a  day,  they  can  produce  clothing  for  their  own  na- 
tion and  for  nation  A. 

The  obvious  thing  to  be  done  is  for  each  nation  to  work 
six  hours  a  day  (A  at  food  production,  B  at  clothing  pro- 
duction) and  exchange  their  surpluses.  If  each  nation  con- 
tinues to  produce  both  commodities  for  itself,  does  the  extra 
two  hours  work  per  day  bring  additional  wealth?  Certainly 
not.  Never  will  such  extra  work  bring  additional  wealth 
to  the  nation  which  forces  its  members  to  it  by  a  system  of 
restricted   imports.     The   proper   course   is    to   keep   clear  of 


PROTECTIOX  155 

such  protective  interference,  and  leave  the  way  open  for 
foreigners  to  introduce  to  us  those  commodities  which  they 
produce  more  cheaply  than  we;  receiving,  or  having  pre- 
viously received,  in  exchange,  those  which  we  produce  more 
efficiently  than  they,  or  the  services  we  render  in  carrying 
their  goods,  or  the  services  of  former  years  in  advancing 
capital  to  them. 

When  the  exchange  ceases  to  have  value  because  one  na- 
tion has  discovered  a  way  of  producing  a  previously  im- 
ported commodity  more  cheaply  or  more  efficiently  than 
the  other,  the  exchange  naturally  ceases  to  occur,  since 
the  demand  for  the  foreign  goods  dies.  Until  it  ceases  to 
occur  it  can  be  taken  as  certain  that  it  is  advantageous  that 
it  should  occur. 

The  creation-of-work  argument  has  so  much  surface 
plausibility,  and  is  so  vigorously  insisted  on  by  the  Tariff 
Reformers  that  I  shall  not  be  thought  to  be  unduly  labour- 
ing the  matter  if  I  emplo}^  another  illustration  to  show  how 
ill-founded  it  is.  ' 

Suppose  that  the  making  of  a  roll-top  desk  requires  in 
England  the  work  of  10,000  men  for  one  day.  Suppose  that 
the  making  of  a  piece  of  cloth  requires  in  England  the  work 
of  10  men  for  one  day,  there  being  nothing  of  extraordinary 
value  in  its  raw  material.  Suppose  that  America  (able  to 
produce  the  desk  more  cheaply  and  the  cloth  only  more 
dearly)  offers  to  exchange  a  desk  for  a  piece  of  cloth.  If 
we  accept  the  exchange  we  procure  the  desk  by  the  labour 
of  10  men.  If  we  refuse  the  exchange,  by  erecting  a  tarilfif 
wall  round  our  harbours,  in  order  to  procure  that  desk  we 
must  employ  the  labour  of  10,000  men;  or  in  other  words, 
we  shall  be  wasting  the  labour  of  9,990  men  who  might  be 
employed  otherwise.  Surely,  when  the  matter  is  put  thus 
extravagantly  the  Tariff  Reformer  ought  to  see  the  folly  of 
his  more-work  argument;  yet  it  is  a  pitiful  fact  that  when 
the  figures  are  not  so  exaggerated  he  cannot  realise  his 
absurdity.  If  his  philosophy  were  sound,  gifts  from  one 
nation  to  another  would  be  acts  of  hostility;  the  presenta- 
tion of  the  Statute  of  Liberty  by  France  to  America  w^ould 


IS6  FREE  TRADE  AXD 

not  constitute  a  proof  of  friendship,  but  a  subtle  attempt 
to  reduce  the  wealth  of  America  by  depriving  her  people  of 
the  work  of  erecting  the  Statue  for  themselves! 

The  fact  is  this:  Work  is  not  in  itself  an  economic 
desideratum;  the  produce  of  work  is;  and  when  freedom  of 
importation  is  interfered  with,  the  volume  of  work  is  in- 
creased while  the  volume  of  the  produce  of  work  is  dimin- 
ished. 

HI. 

The  last  step  in  this  enquiry  is  to  discover  what  is  to  be 
done  when  one  or  other  of  our  three  persons  has  begotten 
a  family  and  some  of  the  members  of  it  are  in  a  state  of 
semi-starvation,  although  they  are  quite  willing  to  work. 
The  reason  for  such  an  occurrence  must  be  one  of  these: 
Either  (a)  someone  is  getting  more  than  his  share  of  produce; 
or  (b)  the  domain  of  that  family  is  not  producing  within  itself 
or  gaining  by  exchange  sufficient   for  all. 

If  reason  (a)  explains  the  distress,  the  remedy  lies  in 
the  emplojmient  of  a  more  equitable  scheme  of  internal  dis- 
tribution. If  reason  (b)  explains  the  distress,  the  remedy 
lies  in  increasing  the  volume  of  the  products  of  industry  and 
exchange. 

The  question  of  distribution  is  a  branch  of  social  reform 
foreign  to  the  subject  of  this  article,  which  is  concerned 
with  the  increase  of  the  wealth  of  the  country  as  a  whole; 
but  it  may  be  well  to  point  out  that  the  experience  of  the 
Continent  and  of  the  large  towns  of  America  has  by  no 
means  tended  to  show  that  a  protective  tariff  is  a  useful 
instrument  for  equitable   distribution. 

The  question  of  increasing  the  volume  of  products  is 
very  pertinent;  and  that  which  an  individual  would  rightly 
do  to  promote  this  increase  must  also  be  the  proper  thing 
for  a  nation  which  has  a  section  of  its  inhabitants  half 
starved.  The  individual  would  take  this  course:  he  would 
welcome  with  open  arms  the  flow  of  produce  from  the  do- 
mains of  others  on  to  his  own;  and  he  would  see  to  it 
that  wherever  the  soil  of  his  domain,  capable  of  being  made 


PROTECTION  157 

productive.  remained  unproductive,  changes  were  made  to 
alter  such  a  state  of  things. 

Such,  too,  is  the  right  course  for  a  nation.  To  increase 
its  wealth  no  tariff  must  be  allowed  to  interfere  with  im- 
ports, and  measures  must  be  taken  to  prevent  the  land  be- 
ing held  idle  where  it  is  capable  of  being  made  productive. 

A  word  remains  to  be  said  as  to  the  fallacies  which  are 
the  foundation  of  the  Tariff  Reformer's  ideas. 

His  views — founded  on  a  misconception  of  the  part 
played  in  commerce  by  money — seem  to  be  these:  Imports 
are  bad,  exports  are  good.  The  logical  course  for  him  to 
advocate  would  be  the  mooring  of  a  gunboat  at  every  har- 
bour mouth  with  instructions  to  send  to  the  bottom  every 
incoming  vessel;  and,  on  the  other  hand,  the  loading  of 
outward  bound  steamers  with  as  much  as  they  could  carry, 
to  be  presented  gratis  to  the  foreigner.  That  is  the  really 
sound  way  of  discouraging  imports  and  encouraging  ex- 
ports! 

The  truth  of  the  matter  is  that  imports — the  income  of 
the  nation  from  external  sources — are  the  things  to  be  en- 
couraged; exports — the  expenditure  of  the  nation — are  good 
in  their  way.  but  only  good  in  that  they  are  productive  of 
imports. 

The  fallacies  upon  which  the  Tariff  Reformer's  views 
are  based  seem  to  be  three. 

The  first  is  that  a  large  amount  of  work  means  neces- 
sarily a  large  amount  of  wealth;  this  misconception  has 
already  been    dealt   with. 

The  second  is  that  every  payment  for  the  foreign  labour 
expended  on  iinported  goods  is  so  much  dead  loss:  where- 
as, in  fact,  that  payment  usually  consists  of  goods  upon 
which  British  labour  has  expended  itself  more  efficiently 
than  it  could  have  done  in  producing  internally  the  goods 
imported. 

The  third  is  that  the  extinction  of  an  industry  under 
stress  of  foreign  competition  is  a  loss  which  has  no  com- 
pensating advantage.  It  is  true  there  is  some  immediate 
hardship;  but   it  is  also  clear   that   in  the   long  run  the  pro- 


158  FRl'lE  TRADE  AND 

cess  is  a  Ijcneficent  one.  It  is  only  the  diversion  of  capi- 
tal and  labour  from  a  field  where  they  cannot  any  longer 
be  employed  to  their  utmost  efficiency,  to  another  field 
where  they  can  be,  and  where  they  produce  goods  which 
directly  or  indirectly  are  exchanged  for  the  foreign  produce. 
It  will  be  urged  that  capital  and  labour  cannot  continue  in- 
definitely to  find  new  fields  of  employment;  but,  in  reply  to 
this,  it  may  be  pointed  out  that  when  they  can  no  longer  do 
so,  the  necessity  for  them  to  do  so  will  have  ceased.  For 
mark  this:  apart  from  those  which  represent  dividends  on 
our  capital  invested  abroad,  and  the  earnings  of  our  carry- 
ing trade,  imports  are  paid  for  by  exports,  and  will  not  be 
sent  in  bj'  the  foreigner  unpaid  for.  When,  therefore,  it 
might  appear  that  capital  and  labour  could  no  longer  find  a 
field  for  employment,  just  at  this  point  the  production  of 
goods  to  exchange  for  foreign  goods  comes  to  an  end;  the 
importation  of  the  foreign  goods  ceases,  since  they  will  not 
be  paid  for  if  sent;  with  the  cessation  of  the  imports  ceases 
also  the  diversion  of  the  capital  and  labour  from  the  chan- 
nels  in  which  they  are  then  employed. 


Westminster  Review.   164:   135-45.  August,   1905. 

Free  Trade  x.  Protection.     William   D.    Hamilton. 

When  a  man  produces  a  commodity  and  exchanges  it 
for  money  or  some  other  commodity,  he  does  so  because 
the  exchange  confers  an  advantage.  The  advantage  secured 
is  the  measure  of  the  remuneration  or  the  profit  upon  pro- 
duction. Hence  we  say  that  trade  is  conducted  upon  the 
lines  of  mutual  advantage.  As  civilisation  advances  the 
circle  of  exchange  not  only  widens  but  becomes  increasing- 
ly diversified  and  complex.  The  principle  on  which  trade 
is  conducted,  however,  remains  the  same;  and  a  simple 
illustration  will  suffice  to  explain  this.  Three  men,  a 
tailor,  a  shoemaker,  and  a  baker  produce  clothes,  boots, 
and  bread.  Each  requires,  in  addition  to  the  commodities 
which    he    manufactures,    the    commodities    manufactured    by 


I 


PROTECTION  159 

the  other  two.  But  each  can  with  the  greatest  ease  supply 
himself  with  the  product  of  his  own  craft,  he  devotes  his 
surplus  time  to  supplying  the  other  two,  and  in  exchange 
gets  the  produce  of  their  labour,  so  that  all  three  finally 
get  boots,  bread,  and  clothes  much  more  easily  and  much 
more  cheaply  than  if  each  had  resolved  to  do  all  these 
things  himself.  At  first,  let  us  assume,  the  three  craftsmen 
all  work  with  the  most  primitive  tools  in  their  respective 
trades.  A  mechanic  in  France,  however,  invents  a  sewing 
machine;  and  the  French  tailors,  by  adopting  this  device, 
find  that  they  can  produce  clothes  at  one-fourth  of  the  cost 
of  British  goods,  and  being  desirous  of  obtaining  British 
bread  and  British  boots  they  can  therefore  pay  the  carriage 
of  the  goods  to  this  country,  and  offer,  let  us  say,  three 
times  as  many  clothes  to  the  shoemaker  and  the  baker  in 
exchange  for  their  products.  But  the  British  tailor  is  a 
staunch  Conservative,  unflinchingly  adhering  to  the  things 
his  father  approved  of.  He  swears  by  the  needle  as  a 
divinely  appointed  institution  for  providing  work,  and  will 
have  nothing  to  do  with  sewing  machines.  The  natural 
result  is  that  the  shoemaker  and  the  baker,  being  now  able 
to  live  much  easier,  get  all  their  clothes  from  France.  The 
tailor,  however,  has  political  influence,  and  raises  a  great 
"patriotic"  agitation,  shows  that  work  is  going  out  of 
the  country  to  be  undertaken  by  Frenchmen,  and  insists 
that  he  be  protected.  In  vain  do  the  baker  and  the  shoe- 
maker protest;  patriotism  carries  the  day.  A  tax  is  im- 
posed upon  French  clothes,  and  the  baker  and  shoemaker, 
who  under  free  conditions  were  having  a  good  time,  are  at 
length  reduced  to  the  same  old  grind  as  before. 

"But,"  says  the  Protectionist,  "the  illustration  shows  a 
triumph  for  our  policy,  for  whereas  only  two  were  working 
and  having  a  good  time,  now  all  three  are  working,  although 
two  may  have  to  work  harder  and  longer  under  Protection 
than  under  free  exchange."  I  cannot  see  much  of  a  triumph. 
Certainly  work  has  been  got.  but  the  total  wealth  of  the 
community  has  been  reduced  through  the  perversity  and 
influence  of  one-third  of  the  workers. 


i6o  1-REE  TRADE  AND 

,) 

'"But  what  about  the  tailor?"  asks  your  Tarifif  Reformer, 
"has  he  not  been  protected?"  Certainly  he  has;  and  if  he 
can  only  get  the  clothes-tax  maintained  and  increased,  he 
will  yet  make  the  baker  and  the  shoemaker  sweat  harder 
than  ever. 

Protection,  in  short,  can  never  benefit  the  community 
or  the  nation  which  adopts  it.  A  few  may  benefit,  but  this 
can  only  be  at  the  expense  of  the  many.  The  rational  way 
would  have  been  to  insist  that  the  tailor  should  adapt  him- 
self to  the  altered  conditions,  either  by  going  in  for  sew- 
ing machines,  or,  seeing  the  new  and  increasing  demand 
which  was  arising  for  boots  and  bread,  by  going  in  for 
these  or  some  of  the  allied  industries.  In  this  way  only 
can  the  community,  or  the  nation  as  a  whole,  get  wealth 
with  the  minimum  of  work. 

If  under  such  simple  conditions  Protection  or  Fair  Trade 
so-called  fails,  it  is  quite  evident  that  it  must  fail  to  a  still 
greater  degree  where  the  number  of  crafts  is  multiplied, 
and  civilisation  assumes  more  complex  and  diversified  forms. 

In  a  civilisation  like  our  own  for  example,  Protection  or 
Fair  Trade  can  only  benefit  an  almost  inappreciable  fraction 
•  of  the  community,  the  various  rings  or  trusts  that  are  inter- 
ested in  the  tax.  These,  like  Carnegie  and  others  in  Ameri- 
ca, will  wax  fat  and  rich  beyond  the  dreams  of  the  wildest 
avarice,  but  the  co-relative  is  commensurately  harder  con- 
ditions for  the  many. 

That  "there  is  nothing  new  under  the  sun"  is  quite  true 
'so  far  as  first  principles  are  concerned,  the  law  of  gravita- 
tion was  as  true  when  the  world  was  steeped  in  the  ignor- 
ance of  the  stone  age  as  it  is  now  when  inen  are  cognisant 
of  it.  So  with  trade,  the  principles  are  eternal  whether 
men  know  them  or  not.  It  is  ours  to  discover  them  and 
shape  our  policy  accordingly.  By  an  intelligent  apprecia- 
tion of  the  law  of  gravitation  we  may  weigh  suns  and  put 
the  moon  in  a  balance,  or  trace  the  path  of  a  projectile 
through  the  air,  calculate  the  vibrations  of  a  pendulum  and 
the  velocity  which  jjursts  a  flywheel.  But  to  do  these 
things    we    must    first    resolve    that    reason,    not    the    senses. 


PROTECTION  i6i 

shall  be  our  guide.  To  the  uninstructed  eye  what  more 
obvious  than  that  the  sun  moves  round  the  earth,  and  that 
the  stellar  universe  is  but  dust  in  the  balance  as  compared 
with  our  planet?  Reason,  however,  changes  the  view  point. 
The  very  opposite  of  this  becomes  established  fact,  and 
compared  with  the  worlds  around  us,  man  with  all  his  works 
shrinks  into  insignificance.  So  with  Protection,  what  more 
obvious  to  the  uninitiated  than  that  a  tax  on  the  commodi- 
ties produced  in  other  countries  will  bring  us  national  pros- 
perity?. Yet  the  very  opposite  is  the  truth.  Our  highest 
prosperit3^  as  a  nation  can  only  be  attained  by  the  fullest 
and  freest  intercourse  with  other  nations. 

^  It  is  no  argument  to  say  that  because  other  nations  are 
foolish  enough  to  lay  an  embargo  upon  trade  we  should 
follow  their  example.  If  a  little  Protection  be  good,  surely 
more  is  better.  If  it  be  good  to  keep  some  foreign  prod- 
ucts out,  surely  it  will  be  better  to  keep  out  all.  And  in 
that  case  we  should  have  no  dealings  whatsoever  with  other 
nations.  The  logical  conclusion  therefore  of  Protection  is, 
that  we  should  build  a  prohibitive  tariff  wall  around  our 
shores,  and  exclude  all  produce  from  the  outside,  doing 
everything  for  and  within  ourselves.  But  if  this  be  good 
for  the  nation,  why  not  for  the  individual?  Each  county, 
town,  or  village  has  as  good  a  right  to  be  protected  from 
each  and  all  of  its  fellows  as  the  nation  has  to  be  protected 
from  other  nations.  And  if  good  for  the  county,  town,  and 
village,  wh}^  not  for  families  and  for  the  individuals  which 
compose  them?  Should  the}'  not  on  this  principle  be  each 
protected  from  the  other  until  we  arrive  at  the  Protection- 
ist ideal,  where,  without  intercourse  or  exchange  with  any 
other  individual,  every  individual  would  produce  for  him- 
self everything  that  he  required? 

This,  then,  is  Protection  shorn  of  all  its  specious  trap- 
pings— a  gradation  towards  barbarism  and  finally  death. 

Some  would  have  us  resort  to  Protection  in  the  interest 
of  agriculture.  They  affect  to  bemoan  the  land  which  has 
gone  out  of  cultivation,  and  ascribe  this  sad  condition  of 
things  to  the   122  millions  worth  or  thereabouts  of  temper- 


i62  FREE  TRADE  AND 

ate  zone  foodstuffs  which  are 'annually  dumped  upon  our 
shores."  They  describe  this  as  "smothering  the  agricultural 
industry,  in  every  view  the  best  of  all  industries."  But  they 
are  scrupulously  careful  to  avoid  any  mention  of  the 
smothering  effect  of  the  fifty  millions  sterling  per  annum 
which  the  agricultural  landlords  exact  as  rent.  Until  Pro- 
tectionists are  pleased  to  consider  and  remove  this  enor- 
mous tax  on  agricultural  production,  thinking  men  cannot 
fail  to  regard  their  interest  in  this,  "the  most  ancient  and 
most  useful  of  all  industries,"  as  the  sheerest  cant.  • 

If  we  spend  122  millions  on  foreign  temperate  zone  food- 
stuffs it  is  quite  evident  we  get  good  value  for  our  money. 
What,  on  the  other  hand,  do  the  agriculturists  get  for  the 
fifty  millions  pounds  they  pay  as  rent?  Nothing  but  the 
use  of  the  land,  which  was  there  before  man  came,  and  in 
all  probability  will  remain  long  after  he  has  ceased  to  exist. 
Evidently,  therefore,  the  agriculturist  needs  Protection;  but 
it  is  not  against  the  foreigner  who  gives  him  good  value  for 
his  money,  but  against  the  exactions  of  the  landlord  who 
gives  him  nothing  that  Nature  has  not  already  provided. 

Man  is  pre-eminently  a  trading  animal.  His  very  ne- 
cessities compel  him  to  trade  if  he  is  to  make  the  best  of 
the  natural  opportunities  with  which  an  all  wise  and  bene- 
ficent Creator  has  provided  him.  In  this  sense  trade  may 
be  regarded  as  a  divine  institution  for  bringing  men  to- 
gether and  causing  them  to  know  each  other  better  than 
they  could  by  any  other  means.  Any  regulation  there- 
fore which  prevents  free  intercourse  and  mutual  under- 
standing between  man  and  man  is  not  only  unwise  but  un- 
natural and  unholy;  and  the  fruits  of  the  same  are  hate, 
war   and   barbarism. 

To  secure  for  every  industrial  child  of  the  earth  the 
varying  fruits  and  riches  of  every  clime  it  is  only  necessary 
that  absolute  freedom  to  proditce  and  to  exchange  com- 
modities be  assured.  In  so  far  as  we  fail  to  abolish  re- 
strictions upon  trade  to  that  extent  shall  we  fail  to  develop 
that  mutually  beneficial  interdependence,  which  on  the  econ- 
omic   plane    testifies    to    the    fatherhood    of    God    and    the 


PROTECTION  163 

brotherhood    of    man.      To    that    extent    will    the    universal 
beneficence   of  the  All   Father  be  veiled  from  us. 

In  the  light  of  these  principles  zollvereins,  preferential 
tariffs,  and  all  interferences  whatsoever  with  trade  must  be 
regarded  as  the  political  expedients  of  men  who  are  either 
knaves  or  fools. 

These  principles  are  eternal  and  unchanging.  But  to- 
day, more  urgently  than  ever  before,  they  confront  the 
statesmen  of  everj-  civilised  country,  and  will  confront 
them  until  realised  in  just  political  institutions  and  abso- 
lutely free  economic  conditions,  or,  if  ignored,  until  nation- 
al disaster  becomes  the  penalty  of  violated  law.  Henry 
George,  who  more  than  any  man  has  logically  and  fear- 
lessly co-related  the  salient  facts  of  life  and  experience  with 
the  operation  of  natural  and  economic  law%  says,  in  summing 
up  his  great  work,  Protection   or  Free   Trade : 

"Here  is  the  conclusion  of  the  whole  matter,  that  we  should 
do  unto  others  as  we  would  have  them  do  to  us — that  w^e  should 
respect  the  rights  of  others  as  scrupulously  as  we  would  have 
our  own  rights  respected  is  not  a  mere  counsel  of  perfection  to 
Individuals,  but  it  is  the  law  to  which  we  must  conform  social 
institutions  and  national  policy  if  we  would  secure  the  blessings 
of  abundance  and   peace." 

Free   Trade   Broadside.    4:   9.    April,    1912. 
x\re    Wages    Higher? 

In  determining  the  height  of  wages  there  are  two  points 
to  be  considered.  The  first  is  the  question  of  fairness.  In 
other  words,  what  percentage  of  that  which  the  laborer  pro- 
duces is  given  back  to  him  in  wages?  Times  may  be  bad, 
wages  may  be  cut  down  because  of  inability  to  pay,  but  the 
laborer  cannot  complain  of  added  unfair  treatment  at  the 
hands  of  his  employer,  so  long  as  labor's  share  of  the  gross 
profits    remain    at    the     same    percentage. 

From  the  official  censuses  of  the  United  States,  we  are 
able  to  obtain  some  light  on  this  point.  Let  us  take  for  in- 
stance the  textile  industries,  owing  to  their  being  the  centre 
of  economic  and  sociological  discussion  at  the  present  time. 


i64  FREE  TRADE  AXD 

Let  us  compare  the  results  tabulated  in  the  census  of  1890 
with  the  results  tabulated  in  the  special  census  of  1905,  that 
being  the  most  recent  report  at  present   available. 

Our  method  of  procedure  will  be  as  follows:  To  ascer- 
tain the  gross  profits  of  the  textile  industries,  we  must  find 
the  amount  of  enhanced  value  given  by  them  of  the  raw 
material  which  goes  into  their  hands.  In  other  words,  we 
subtract  from  the  value  of  the  total  turned  out.  the  value 
of  the  total  raw  material  going  in.  This  gives  us  the  value 
of  the  work  done  by  the  textile  industries.  This  value  is 
distributed  in  the  form  of  wages,  salaries,  dividends,  rent, 
royalties,  depreciation  charges,  etc.  The  part  of  this  which 
labor  gets  is  represented  by  wages.  The  part  which  the 
officers  of  the  mills  get  is  represented  by  salaries.  It  is 
easy  to  ascertain  what  percent,  of  the  whole  each  of  these 
items    amounts   to. 

The  following  figures  show  the  result  of  this  calculation. 

1890  1905 

Value    of    finished    goods 1.261,672,504         2,147,441,418 

Cost    of    raw    materials 705,004,909         1,246,562,061 


Value    of    work    done 556,667,595  900,879,357 

Wages 278,167,769  419,841,630 

Labor's  share 50  per  cent.  46.6  per  cent. 

Salaries     35,496,486  69,281,415 

Officers'  share 6.3  per  cent.  7.6  per  cent. 

Thus  we  see  that  from  1890  to  1905,  Labor's  share  of 
the  gross  profits  of  the  business  has  decreased  from  50 
percent,  to  46.6  percent.,  while  the  officers'  share  has  in- 
creased from  6.3  percent,  to  7.6  percent.  Labor  has  lost  3.4 
percent,  while  the  employers  (or  rather  the  high  salaried 
officials)  have  gained  1.3  percent. 

From  these  same  census  reports  we  can  find  very  much 
the  same  decrease  in  Labor's  share  in  every  line  of  in- 
dustry. The  following  table  contains  a  general  summary 
of  the  percentages  paid  to  the  workers  in  1890  as  compared 
to   the    percentages   paid   them   in    1905. 


PROTECTION  ■  i6s 

Name   of  industrj'  1890  1905 

Iron  and  steel 58.4  49.5 

Leather    41.7  39.0 

Tobacco     45.9  41.9 

Textile    50.0  46.6 

Thus  we  see  that  the  modern  trend  in  all  these  indus- 
tries is  to  reduce  the  share  paid  to  the  workers.  Whether 
this  is  done  by  lowering  wages  or  by  speeding  up  the  ma- 
chines and  overworking  the  employees,  is  immaterial.  The 
fact  remains  that  these  figures  show  a  decrease  in  wages, 
in   spite  of  the  protective  tariff. 

The  other  point  to  be  considered  in  determining  the 
height  of  wages  is  the  question  of  the  purchasing  power  of 
the  wage.  In  other  words,  how  much  in  real  value  are  the 
laborers  being  paid?  This  point  has  been  treated  at  some 
length  in  previous  issues  of  the  Broadside.  Numerous  sta- 
tistics have  been  collected  to  show  that  the  recent  rise  in 
prices  has  been  sufficient  to  make  the  American  dollar  worth 
at  least  a  quarter  less  than  in  the  last  low  tarifi"  year. 

Reader".    10:    612-8.    November,    1907. 

Tariff — Help  or  Hindrance?     William  Jennings  Bryan. 

Tariff  on  Farm  Products  a  Mockery 

\Mien  the  protectionist  appeals  to  the  farmer  he  as- 
sumes, as  a  matter  of  course,  that  the  consumer  of  the  farm- 
er's product  not  only  pays  the  tariff  upon  the  imported  article 
which  enters  into  competition  with  that  product,  but  that 
when  he  buys  the  farmer's  product  he  pays  the  foreign  price 
plus  the  tariff.  This  is  consistent  as  a  theory,  and  if  it 
were  true  in  fact  the  farmer  might  feel  that  his  pecuniary 
interest  would  be  advanced  by  the  tariff,  but  as  a  matter  of 
fact  this  argument  is  deceptive  when  applied  to  the  farmer. 
The  staple  products  of  agriculture  are  exported,  and  the 
price  of  the  part  sold  in  this  country  is  fixed  by  the  price 
at   which    the    surplus    is    sold   abroad.      There    may    be    ex- 


i66  FREE  TRADE  AND 

ceptional  cases  in  which  a  tariff  on  farm  products  may  for 
a  short  time  help  the  people  in  a  limited  district,  but,  gen- 
erally speaking,  the  farmers  of  the  United  States  are  not 
in  the  position  to  take  advantage  of  the  tariff.  If  they  could 
combine  and  raise  the  price  of  the  home  product  to  a  point 
equal  to  the  foreign  price,  plus  the  tariff,  they  might  share 
in  the  benefits  of  the  present  protective  system,  but,  as  they 
are  too  numerous  to  combine,  the  tariff  on  farm  products 
is  a  mockery.  If  it  could  be  shown  that  in  some  cases  an 
import  duty  on  farm  products  gives  a  little  aid  to  a  few 
farmers,  the  total  benefit  received  by  them  would  be  in- 
significant compared  with  the  enormous  tax  which  all  farm- 
ers must  bear  because  of  the  tax  placed  upon  the  manu- 
factured  products,   which   the}^   bu3^ 

Tax   Falls   on    Constiiiicrs 

The  manufacturers,  on  the  other  hand,  are  able  to  add 
the  tariff  to  the  price  of  their  goods,  and  they  can  not 
make  an  argument  in  favor  of  a  tariff  without  admitting 
that  they  do  so  and  that  they  thus  compel  the  consumer 
to  pay  the  tax,  whether  he  buys  at  home  or  abroad.  If  he 
insists  that  he  can  not  manufacture  as  cheaply  as  the  for- 
eigner, and  asks  for  a  tariff  just  equal  to  the  difference  in 
the  cost  of  production  here  and  abroad,  how  can  he  pro- 
duce, under  the  tariff,  any  better  than  he  could  without  the 
tariff,  vmless  he  adds  the  tariff  to  the  price   of  his  goods? 

xA.s  we  import  manufactured  goods,  the  manufacturer 
occupies  a  position  just  the  reverse  of  that  occupied  by  the 
farmer.  The  farmer  finds  his  competitor  in  a  foreign  mar- 
ket; the  manufacturer  finds  his  competitor  in  the  home  mar- 
ket. As  the  importer  must  pay  the  duty  on  the  foreign  arti- 
cle, his  interest  leads  him  to  buy  the  home  article  if  it  is  of- 
fered him  at  a  price  no  greater  than  the  foreign  price  with 
the  tariff  added. 

If  the  home  product  is  equal  in  amount  to  the  imported 
product,  and  the  domestic  manufacturer  collects  all  that  the 
tariff  enables  him  to  collect,  then  the  American  consumer 
pays  on  account  of  the  tariff  twice  as  much  as  the  govern- 


PROTECTION  167 

ment  collects.  If  it  is  a  new  industry,  and  we  import  ten 
times  as  much  as  we  produce  at  home,  then  nine-tenths 
of  the  tax  goes  into  the  treasury  under  such  circumstances; 
if  we  produce  at  home  ten  times  as  much  as  we  import, 
and  the  tariff  is  added  to  the  price  of  the  domestic  article, 
then  the  people  pay  ten  times  as  much  as  the  treasury  re- 
ceipts  from   that   article   show. 

The  friends  of  the  protective  system  contend  that  com- 
petition at  home  will  reduce  prices  to  a  point  where  the 
manufacturer  will  appropriate  only  so  much  of  the  tariff 
as  is  necessary  to  support  his  industry,  and  that  the  compe- 
tition created  by  the  new  industries  will  lead  to  improve- 
ments in  method  which  will  reduce  the  cost  of  production, 
and  thus  compensate  those  who  have  temporarily  borne  the 
burden   of  protection. 

A'o  Reduction  NoiL'-a-days 

At  present,  competition  is  to  a  considerable  extent  stifled 
by  the  trusts,  and  yet,  even  with  this  regulator — competi- 
tion— disabled,  there  is  no  disposition  among  the  "friends 
of  the  tariff"  to  inaugurate  or  consent  to  a  reduction.  In 
many  instances  the  manufacturers  sell  abroad  at  a  low  price 
in  competition  with  the  world,  and  sell  at  home  at  a  high 
price   because   the   tariff  wall   enables   them  to   do   so. 

The  tariff  was  at  first  defended  as  a  patriotic  system, 
calculated  to  render  the  country  independent  in  time  of 
war.  There  is  force  in  the  argument  when  it  is  presented 
in  behalf  of  a  country  just  entering  upon  national  existence 
— at  least  there  is  more  force  in  such  an  argument  when 
applied  to  a  young  nation  than  when  applied  to  our  nation 
to-day.  Such  an  argument  always  implies  that  the  pro- 
tection is  temporary;  it  is  intended  to  guard  infant  indus- 
try until  it  is  able  to  stand  upon  its  feet.  It  is  absurd 
to  employ  the  argument  to  shield  industries  which  are  not 
only  able  to  stand  upon  their  own  feet,  but  to  walk  over 
the  feet  of  others.  Even  Henry  Clay  admitted  the  tem- 
porary character  of  protection.  He  said  in  1833:  "The 
theory  of  protection  supposes,  too,  that  after  a  certain  time 


i68  FREE  TRADE  AND 

the  protected  arts  will  have  acquired  such  strength  and 
perfection  as  will  enable  them  subsequently,  unaided,  to  stand 
against  foreign  competition." 

Seven  years  later  Mr.  Clay  said:  "No  one,  Mr.  Presi- 
dent, in  the  commencement  of  the  protective  policy,  ever 
supposed  that  it  was  to  be  perpetual." 

The  same  doctrine  is  set  forth  by  Alexander  Hamil- 
tion  in  his  report.  He  declares:  "The  continuance  of  bounties 
on  manufactures  long  established  must  always  be  a  ques- 
tionable policy,  because  a  presumption  would  arise  in  every 
such  case  that  there  were  natural  and  inherent  impediments 
to   success." 

The   U 'arrant  of  History 

It  is  possible  that  the  protectionists  will  still  contend  that 
"we  always  have  good  times  when  we  have  a  high  tariff  and 
bad  times  when  we  have  a  low  tariff,"  but  the  contention 
will  have  little  weight  among  those  who  know  anything  of 
history.  Good  times  followed  the  low  tariff  of  1846,  and  the 
panic  of  1893  came  a  year  before  the  McKinley  law  was 
repealed.  The  panic  of  1873  came  twelve  years  after  the 
Republican  party  came  into  power  and  twelve  years  before 
Mr.  Cleveland's  first  term  began. 

The  only  possible  argument  that  can  be  made  in  favor  of 
a  protective  tariff  to-day  is  that  if  we  had  no  tariff  at  all  the 
foreign  manufacturer  might  reduce  his  export  price  below 
the  price  at  which  he  sells  at  home  until  he  bankrupted  our 
manufacturers.  The  force  of  this  argument  is  very  much 
exaggerated,  but  'it  is  given  for  what  it  is  worth.  Secre- 
tary Shaw  estimates  that  the  discount  made  by  foreign 
manufacturers  in  order  to  secure  American  trade  ranges 
froni  five  to  twenty-five  per  cent.  According  to  his  own 
showing  a  tariff  of  twenty-five  per  cent,  would  cover  every 
possible  danger  from  this  source.  But  the  manufacturers, 
.not  content  with  such  a  rate,  have  secured  a  rate  twice  as 
high  and  obstinately  oppose  any  reduction. 

The  tariff  which  we  have  to-day  does  not  rest  upon  argu- 
ment, or  logic,  or  theory;  it  rests  purely  upon  the  power  of 
the  protected  interests  to  control  Congress. 


PROTECTION  169 

Co-operation  Magazine,  i:  21.  February,   1910. 

How  the  Tariff  Works. 

The  man  who  imports  $1,000  worth  of  diamonds  pays  a 
tax  of  but  $100 — 10  per  cent.  If  he  imported  a  thousand 
shirts  worth  a  dollar  each  he  would  have  to  leave  at  the 
Custom  House  and  tack  on  to  his  selling  price  $600 — 60  per 
cent.  If  he  decided  that  he  would  bring  in  a  thousand  dol- 
lars' worth  of  champagne,  one  of  the  items  on  which  there 
is  a  large  increase,  the  tax  levied  by  the  tariff  is  $500.  If 
he  brought  in  $1,000  worth  of  blankets  he  would  pay  a  tariff 
tax  of  $1,645.42.  If  he  brought  in  $1,000  worth  of  paintings 
and  statuary,  all  he  would  have  to  pay  as  customs  duties 
would  be  $200.00,  but  if  it  were  sugar  he  would  pay  $778.60 
on  $1,000  worth.  If  he  brought  in  $1,000  worth  of  jewelry  he 
would  have  to  pay  $600  tariff  tax,  but  if  he  brought  in  $1,000 
worth  of  woolen  dress  goods  he  would  pay  $1,050.90  tariff. 
If  he  imported  a  $5,000  automobile  the  tariff  takers  would 
relieve  him  of  $2,250.  If  it  were  $5,000  worth  of  yarns,  the 
tariff  tax  would  be  $6,960.  If  the  importation  were  $5,000 
worth  of  furs,  the  tariff  tax  would  be  $1,650,  but  if  it  were 
$5,000  worth  of  clothing,  that  tax  would  be  $3,330.  If  some 
New  York  inillionaire  brings  in  a  $100,000  ocean  yacht  the 
tariff  would  be  $35,000,  but  if  the  importation  were  stock- 
ings the  tariff  would  be  $87,950. — The  Johnston  Magazine. 

Westminster  Review.   161:  254-67.  March,   1904. 

Dishonest  Policy:  Injuring  the  Many  to  Benefit  the  Few. 
M.    D.    O'Brien. 

When  seeking  in  human  motives  for  the  cause  or  causes 
of  Protectionist  tariffs,  we  ought  never  to  lose  sight  of  the- 
ultimate  fact  that  every  producer  has  a  natural  aversion  to. 
industrial  rivals.  It  may  be  doubted  whether  his  objection 
to  th'em  is  one  whit  less  strong  than  that  of  lovers  to  rivals, 
of  another  kind.  Fear  of  rivalry  is  one  of  the  weaknesses  of 
human    nature.     On    this    feeling    the    Protectionist    works. 


I  JO  .  FREE  TRADE  AND 

He  knows  that  we  like  to  have  our  rivals  kept  out  of  the 
running,  and  he  panders  to  our  meanness  by  promising  to 
keep  them  out.  Had  this  gentleman  been  consulted  when 
the  world  was  formed,  there  would  have  been  no  biological 
evolution,  and  consequently  no  human  race  containing  its 
encouraging  examples  of  god-like  intellect.  To  please  his 
inordinate  afifection  for  the  cowardice  that  objects  to  rivals, 
there  would  have  been  no  struggle  for  existence,  the  root 
and  cause  of  which  is  rivalry  in  one  shape  or  another;  in- 
dustrial and  commercial  competition  being  but  the  economic 
aspect  of  that  needful  process  of  selection  by  means  of  which 
the  human  species,  like  the  rest  of  the  organic  world,  is  ad- 
vanced towards  higher  and  higher  reaches  of  mental  and 
physical  activity  through  the  general  survival  of  strength 
and  the  general  elimination  of  weakness  generation  after 
generation  and  age  after  age.  For,  thanks  to  natural  ordi- 
nances which  nothing  human  can  change,  the  strong  in  mind 
and  in  body  do  survive  on  the  whole,  while  the  weak  on  the 
whole  assuredly  go  to  the  wall.  For  this  folly  weeps,  but 
the  wise  who  love  their  race  will  rejoice  and  evermore  re- 
joice. Only  by  the  constant  elimination  of  such  of  its  con- 
stituents as  vary  towards  mental  and  physical  inefificiency, 
only  by  the  constant  selection  of  and  propagation  from  those 
that  vary  in  the  opposite  direction,  is  the  human  race  itself 
preserved,  just  as  the  individual  body  is  preserved  through 
the  throwing  off  of  the  used-up  tissues  that,  if  not  got  rid 
of,  w^ould  compass  its  destruction.  This  process  is  the  im- 
personal saviour  of  humanity,  and  although,  of  course,  to 
outward  appearances  it  may  be  circumvented  for  a  time, 
yet  in  the  long  run  there  is  no  dodging  it.  As  happened 
under  the  sentimental  despotism  of  the  ancient  empire  of 
Peru,  mental  and  physical  inefficiency  may  be  shored  up,  so 
to  speak,  and  saved  from  the  immediate  consequences  of 
itself  until  the  whole  community  has  become  saturated  with 
it,  and  ready  to  collapse  at  the  slightest  touch  of  foreign 
aggression.  This  is  why  the  teaching  of  nature  to  those  who 
seek  the  truth  to  live  by  it  may  be  summed  up  in  these 
two  words:     Be  strong.. 


PROTECTION  171 

Every  producer  dislikes  competition  in  his  own  particu- 
lar line  of  business.  He  is  always,  however,  glad  enough 
to  let  it  cheapen  all  products  and  services  in  which  he  is  not 
commercially  interested.  In  this  respect  he  resembles  the 
Scotchman  who  believed  that  Free  Trade  was  good  in 
everything  except  herrings,  those  being  the  commodities  he 
happened  to  deal  in.  His  object  is  to  do  as  little  as  possible 
for  the  consumers  and  get  as  much  as  possible  from  them. 
The  consumers,  it  must  be  remembered,  are  the  general 
public,  and  therefore  the  interest  of  every  individual  pro- 
ducer, considered  as  such,  is  an  anti-social  interest,  because 
it  means  the  sacrifice  of  the  public  good  (which  lies  in 
abundance  and  cheapness)  to  private  gain,  which,  to  the 
individual  producer,  lies  in  the  scarcity  and  dearness  of  the 
articles  in  which  he  deals.  Of  course,  it  is  perfectly  true 
that  the  producer  is  also  a  consumer.  The  Protectionist 
need  not  remind  us  of  this  fact,  for  it  does  not  in  any  way 
invalidate  the  elementary  economic  truths  just  set  forth. 
The  producer  is  undoubtedly  a  consumer,  and  this  is  the 
verj'  reason  why  he  is  always  in  favour,  secretly  or  openly, 
of  Free  Trade  and  open  competition  in  every  kind  of  busi- 
ness except  his  own;  it  being  to  his  own  private  advantage 
to  buy  cheap  what  others  produce,  while  at  the  same  time 
selling  dear  what  he  produces  himself.  If  not  checked  in 
some  special  manner  at  some  particular  point,  the  levelling 
and  equalising  tendency  of  competition  is  to  deprive  him  of 
this  advantage  by  compelling  him  to  sell  cheap  if  he  sells 
at  all,  and  thus  preventing  him  from  sponging  on  the  serv- 
ices of  others  without  giving  them  just  value  in  return. 

From  this  it  logically  follows  that  what  is  called  Pro- 
tection, which  at  bottom  is  only  the  legislative  shielding  of 
producers  from  the  competition  of  their  rivals,  is  an  appeal, 
not  to  any  desire  for  the  public  good,  but  simply  to  sec- 
tional greed,  either  organised  or  unorganised,  for  anti-social 
objects.  As  a  matter  of  fact,  wherever  there  is  Protection 
there  is  organisation  for  these  objects.  There  is  scheming 
to  exploit  the  public  and  to  corrupt  and  control  the  Legis- 
lature.    There  is  banding  together  of  sectional  interests  bent 


1/2  J'REE  TRADE  AXD 

upon  giving  as  little  as  possible  to  the  public  and  exacting 
as  much  as  possible  in  exchange  for  it.  Such  was  Protec- 
tion sixty  years  ago  when  it  flourished  in  this  country. 
Such  is  it  to-day  in  America,  France,  Germany,  Ital}^  and 
other  countries  where  it  exists.  Everything,  says  Mr.  Cham- 
berlain, has  changed  during  the  last  sixty  years.  But  Pro- 
tection has  not  changed.  Its  nature  and  the  consequences 
of  its  nature  are  exactly  what  they  were.  It  is  still  the 
same  anti-social  system.  It  is  still  the  same  legislative  de- 
vice by  which  monopoly  robs  the  public.  Its  tendency  still 
is  to  make  the  rich  richer  and  the  poor  poorer.  It  still,  in 
proportion  as  it  keeps  the  foreigner  out  of  the  home  market, 
plays  into  the  hands  of  trusts  and  millionaires,  increases 
their  power,  and  multiplies  their  opportunities  of  extortion 
by  diminishing  or  abolishing  the  foreign  competition  which 
circumvents  their  schemes  and  protects  their  victims  from 
their  organised  rapacity.  It  is  still  the  same  unholy  alli- 
ance between  wealth  and  government  for  the  purpose  of 
benefiting  the  few  by  injuring  the  many.  It  is  still  just  as 
fatal  as  ever  to  Parliamentary  purity  and  conscientious  vot- 
ing on  the  part  of  elected  representatives.  Mr.  Chamber- 
lain has  recently  denied  the  truth  of  this  last  charge  in  the 
indictment  against  it,  but  let  his  denial  be  placed  beside  the 
testimony  of  one  who  knows  by  experience  how  far  it  is 
from  fact. 

"For  forty  years,"  says  Mr.  Franklin  Pierce,  of  New  York, 
"for  forty  years,  through  the  enactment  of  protective  tariffs,  we 
[the  Americans]  have  been  corrupting  our  public  men.  We  have 
given  our  legislators  the  power  of  transferring  millions  of  dollars 
from  the  hands  of  the  people  to  the  pockets  of  the  few  hundred 
'Napoleons  of  finance'  by  a  single  congressional  enactment.  Place 
three  or  four  hundred  Republicans  or  Democrats  of  approved 
honesty  in  Congress,  continue  them  there  for  a  few  years,  and  a 
considerable  portion  of  their  number  will  surely  yield  to  the  temp- 
tation to  make  money  out  of  tariff  legislation.  So  successful  have 
wealth  and  avarice  been  in  controlling  national  legislation  that 
to-day  few  men  ever  think  of  attaining  wealth  in  great  business 
ventures  without  national  or  State  aid  in  the  form  of  special 
legislation. "1 

President  Cleveland,  according  to  'Sir.  Roberts,  once 
"tried  to  bring  home  to  the  people   [of  America]   that  a  protective 


iQuoted    by    Mr.     L.     G.     Chiozza-Money    in    tlie    issue    of    the 
Morning  Leader  for  Oct.   9,  1903. 


PROTECTION  173 

tariff  is  a  tax  upon  the  wliole  nation  for  the  benefit  of  a  few  sec- 
tions, that  it  brought  a  revenue  to  the  Government  far  exce^- 
ing  all  possible  needs  and  resulting'  in  all  manner  of  scandalous 
public  expenditures  on  pensions,  public  works,  and  the  like.  But 
it  was  too  late.  The  pap  of  public  bounty  had  raised  up  monsters 
of  such  strength  and  power,  with  tentacles  interlacing'  such  diver- 
sified ranks  of  life,  as  to  make  them  practically  unassailable.  .  .  . 
The  McKinley  Bill  .  .  .  was  attended  with  so  many  scandals  as 
to    disgust   the   great    majority   which    had    made   it   possible." 

When  a  protective  tarifif  is  being  made, 

"to  Washington  come  bodies  of  manufacturers  or  chambers  of 
commerce  from  some  district  which  holds  its  leading  factories  to 
be  in  need  of  a  little  more  Government  aid  in  the  shape  of  a  tax 
upon  the  foreigner.  .  .  .  Representatives  of  all  the  great  protected 
trades  have  come  to  Washington,  taken  sumptuous  apartments 
at  the  hotels,  and  begun  a  season  of  lavish  hospitality  to  in- 
conspicuous members  of  Congress  whose  votes  may  some  day  be 
of  great  service  for  what  looks  like  an  unimportant  little  line  in 
a  schedule,  but  which  really  means  millions  and  millions  to  the 
sugar  refiners  or   the   steel  kings." 

This  hospitality  includes  card  games  at  which  the  trust  peo- 
ple always  lose  to  the  members  of  Congress.  It  also  in- 
cludes help  in  financial  difficulties  and  gifts  to  wives  and 
daughters.  According  to  Mr.  Chalmers  Roberts, 
"it  is  one  of  the  saddest  things  in  public  life  to  see  some  single 
man.  hitherto  without  reproach  and  supposed  to  be  against  the 
increase  [in  the  tariff]  in  question,  silently  and  without  reason 
giving  his  vote  in  its  favour.  No  one  says  anything  about  it,  but 
every  one  knows  that  another  honest  man  has  fallen.  Not  only 
men  but  whole  districts  are  corrupted.  .  .  .  Neither  economic 
theory  nor  patriotism  endures  long  in  the  light  of  such  self-inter- 
est." 

Outlook.    92:   349-50.   June    12,    igog. 

Spread  of  Protectionism. 

The  only  thing  proved  by  the  spread  of  the  protective 
system  is  that  special  interests  have  obtained  a  powerful 
influence  in  politics  throughout  the  world.  It  is  impossible 
to  watch  the  debates  in  the  Senate  without  becoming  con- 
vinced that  the  tariff  is  being  revised,  not  in  accordance 
with  any  economic  principle,  but  in  accordance  with  the 
demands  and  the  strength  of  the  beneficiaries.  A  Senator 
who  was  remonstrated  with  a  few  days  ago  for  attempting 
to  force  a  roll  call  while  another  Senator  was  trying  to  get 
the  floor  replied:  "What's  the  use  of  talking  when  we've 
got  the  votes?"     The  arguments  adduced  by  the   revisionist 


1/4  FREE  TRADE  AND 

Senators  have  had  no  effect,  because  the  Senate  was  not 
open  to  argument.  And  the  source  of  the  power  of  the 
Finance  Committee  has  been  the  special  interests  in  numer- 
ous states  seeking  protection. 

A  Senator  hesitates  to  disregard  the  behest  of  even  a 
minor  interest,  because  it  has  an  active  concern  in  politics 
whicli  is  likely  to  outweigh  the  languid  interest  of  the  gen- 
eral public.  An  industry  employing  a  thousand  men  can 
give  commands  because  the  Senator  dislikes  to  antagonize  a 
thousand  votes.  One  Senator  from  a  state  with  large  lum- 
bering interests  was  deluged  with  telegrams  urging  him  to 
vote  to  restore  the  Dingley  rates  on  lumber.  He  refused, 
and  voted  for  free  lumber  on  the  ground  that  the  general 
welfare  of  his  state  and  the  country  would  be  best  subserved 
by  a  removal  of  the  duty.  He  cast  his  vote  with  the  knowl- 
edge that  by  so  doing  he  would  antagonize  powerful  inter- 
ests virtually  controlling  many  thousand  votes,  and  that  he 
must  trust  to  the  public  at  large  to  appreciate  his  service 
and  rally  to  his  support  in  sufficient  numbers  to  counteract 
this  loss.     But  few  men  have  that  amount  of  courage. 

Analogous  conditions  exist  abroad.  Everywhere  the 
special  interest  that  knows  what  it  wants  from  the  govern- 
ment is  at  a  great  advantage  over  the  general  public,  for  its 
concern  is  direct  and  immediate,  while  that  of  the  people  is 
remote.  The  public,  at  home  and  abroad,  is  never  represent- 
ed by  powerful  agents  at  the  seat  of  government,  as  are  the 
special  interests.  The  question  of  the  soundness  of  the  pro- 
tective system  is  not  involved  in  the  action  of  foreign  gov- 
ernments in  adopting  it.  All  that  is  proved  is  the  influence 
of  large  interests  in  politics. 


Nation.  87:   130-1.  August   13,   1908. 

Cause  of  Free  Trade. 

The  reaction  toward  protection  in  England  has  been  pos- 
sible only  because  the  generation  that  bred  the  champions 
of   free   trade   has  passed   from   the    stage.     Cobden,    Bright, 


PROTECTION  175 

and  Gladstone  are  gone,  and  with  them  much  of  the  ardent 
temper  of  the  old  Liberalism.  The  victory  seemed  to  be 
completely  won,  the  soldiers  were  resting  on  their  arms, 
and  young  England  had  forgotten  or  perhaps  never  knew 
the  issues  that  once  raised  such  hopes  and  fears.  Taking 
advantage  of  this  apathy  or  ignorance,  the  merchants  and 
manufacturers  who  are  afraid  to  compete  on  even  terms 
with  the  world,  and  would  tax  a  whole  people  for  the  sake 
of  private  profit,  have  made  their  compact  with  the  Con- 
servative leaders  and  captured  the  organization  of  the  party. 
But  in  spite  of  the  money  that  may  be  poured  out  to  secure 
special  privileges  for  the  few,  it  is  hardly  credible  that  Great 
Britain  will  again  revert  to  the  half-civilized  policy  that  she 
long  since  abandoned. 

In  this  country  we  yet  have  a  hard  road  to  travel  before 
we  reach  free  trade,  or  even  the  nearer  stage  of  a  tarifif  for 
revenue  only.  We  are  and  shall  remain  large  producers  of 
grain  and  meat;  and  it  is  therefore  unlikely  that  we  shall  be 
driven  to  free  trade,  as  England  was,  by  the  pangs  of  the 
millions.  The  economic  argument  is  still  irrefutable;  but, 
while  men  are  earning  a  fair  wage,  are  fed,  and  comfortabh' 
clad  and  housed,  they  are  indiflferent  to  general  principles. 
Too  many  of  us  hear  only  the  cry  of  the  belly.  The  evils 
most  apparent  here  and  most  likely  to  touch  the  popular 
imagination  are  the  growth  of  vast  monopolies  under  the 
shelter  of  the  tariff  and  the  wholesale  corruption  of  our 
political  life. 


United  States.   Superintendent  of  Documents. 

Protection's  Favors  to  Foreigners,  pp.  71-3.     J.   G.   Parsons. 

A  comparison  has  been  made  of  some  of  the  export  prices 
from  these  sources  with  the  prices  of  the  same  articles  in 
the  domestic  market  at  the  same  time,  the  domestic  prices 
having  been  obtained  from  reliable  published  lists  of  prices 
current,  as  in  The  Iron  Age,  Hardware,  and  other  publica- 
tions, and   from  manufacturers'  price  lists.     These   compari- 


176  FREE  TRADE  AND 

sons  are  given  in  the  tables  below,  as  illustration's  of  the 
range  of  difference  between  home  and  foreign  prices  oi 
articles  of  general  use.  These  tables  necessarily  are  mere 
fragments,  for  it  requires  time  and  patient  labor  to  accurate- 
ly identify  a  great  variety  of  different  articles  and  compute 
and  compare  their  prices.  They  will,  however,  serve  to  in- 
dicate the  showing  that  would  be  made  by  a  complete  com- 
parison covering  all  the  exported  articles. 

Table  I  shows  the  difference  in  discounts  and  is,  therefore 
much  more  comprehensive  than  Table  II,  which  shows  the 
differences  in  dollars  and  cents  between  export  and  home 
prices  of  certain  specific  articles.  For  example,  the  export 
discount  on  plumbs  and  levels  is  70-10-10-10-5  per  cent, 
while  the  home  discount  is  onl}'-  60-10  per  cent.  This  means 
not  merely  that  a  particular  plumb  or  level  is  referred  to, 
but  that  these  discounts  apply  to  many  kinds  and  sizes  of 
plumbs  and  levels  made  by  the  manufacturer  mentioned,  all 
of  which  are  sold  for  72  per  cent  more  in  the  home  market 
than  for  export.  Frequentljs  if  not  usually,  the  price  lists 
of  other  manufacturers  of  the  same  articles  as  are  here  com- 
pared show  about  the  same  differences  between  export  and 
home  prices.  It  has  been  thought  best  in  most  cases  not  to 
publish  the  names  of  the  manufacturers  whose  prices  are 
quoted: 


PROTECTION 


1/7 


Tablf.   I. — Shoii'iiig  differences  in   discounts  between  export 
and   home   prices. 

[The  prices   are   of  date   between   January   1    and   May   15,    1909. 
Every   price   is  of  the  same   date  as   the   other   of  the  pair,   export 
or  domestic,  in  comparison  with  it.] 


Articles — Description 


adjustable  and 


Auger  bits: 

Irwin's    solid   center    . , 

Sueirs     

Snell's     ■■King"      

Auger  liandles,  Gunn's  No. 

ratchet      

Bells,    Texas    cow    

Bird    cages,    Hendryx's    brass    

Bolt  clippers,    "Xew  Easy"    

Bolts: 

Carriage,    %   by  6   inches   and   smaller 
Haehine,    %  by  4  inches  and  smaller 

Tire     

Borers,   bung  liole.    Enterprise's    

Braces; 

Fray's   genuine    "Spoffords"     , 

Fray's  ratchet,    Xos.    81-161    , 

Xos. 
Xos. 
Xos. 
Xos. 
Xos. 
X'os. 
Xos. 


Export  discount 
from  list. 


Per 
Home   discount    cent 
from  list.        diff er- 


83-143 
62-142 
66-166 
207-214 
407-414 
606-614 
306-314 


Fray's  ratchet, 

Fray's  ratchet 

Fray's  ratchet 

Fray's  sleeve. 

Fray's  sleeve. 

Fray's  sleeve. 

Fray's  plain. 

Can    openers,    "King"    

Cartridges,    rim   fire    

Chains: 

Kennel    

"Triumph"  coil  and  halter    

"Brown"   coil  and  halter   

"Triumph"   dog  leads,   aluminum,  size  4 

Coffee    mills.    Enterprise's    

Door  rollers  and   hangers.   Lane's   

Gauges.   Disston's  steel  and   center   

Harness   snaps: 

Covert's  "Trojan"     , 

Covert's  "Yankee"     

Covert's  "Derby"    

I.awn    siirinklers,    Enterprise's    

Levels,    Starrett's  bench   and   pocket    

Oilstones,    "Lily   \Miite"   and   "Washita"  no. 

1     , 

Pipe  fittings,   malleable    

ripe  machines: 

.Tarecki's  X'o.   6    , 

.Tarecki's  Xo.   7    , 

Jarecki's  Xo.    7A    , 


Per  cent 

60,  10,  and  10 

70 

60   and  10 

35 

50   and  10 

50 

60,  10,  and    5 

80   and  10 

80   and  10 

80,  10,  and  15 

40   and    2 

70 
60  and  10 
60   and  10 

70 

60   and  10 

60,  10,  and  10 

60   and  10 

60   and  10 

70 

25 
60,  10,  10,  and    6 

60  and  10 

65,   7^ 
70,  10,    71^ 

65 

40  and  10 

60.  10,  10.  and    5 

45 

50  and  10 
50 
40  and  10 
40  and  2 
40  and    5 

50 
60,     5 


Per  cent. 
50  and  10 
60 
50 

15  and  10 

50 

30 

50,  10,  and  10 

75  and  10 
75,  10,  and    5 


60 
50 
50 
50 
50 
50 
50 
50 
50 
0 
50 

60 

40 

50,    5 

60 

20  and  25 

60  and  10 

3,     7^,  and  10 

40 

30  and    2 

25 

30 

33%  and     5 

33% 
55,    5 

37%.  ^2^ 

40 


30 

39 

18 
11 
40 
18 

25 
19 

17 
27 

33% 
39 
39 

66% 
39 
54 
39 
39 

66% 
33% 


11 
85 
90 
14 
11 
17 
12 

331/3 

37 

39 

19 

11 

33'/3 
10 

52 
56 
50 


178 


FREE  TRADE  AND 


Tablk  I. — Showing  differences  in  discounts  beiiveen  export  and 
home  prices. — Continued. 


Articles — Description 


Plumbs,    levels,    etc.,    Disston's    

Sausage   stuffers.   Enterprise's    

Saws: 

Disston's  Xos.    7,   107.   107 '/a,    3,   and  1    . 

Dlsston's  combination    

Disston's  Xos.    12,    16.    D8.    120.    76,    8    . 

Disstrn's  compass    and    keyhole    

Disston's  butcher    

Disston's  framed  wood   

Disston's   band    

i'croll   saws.    Barnes's   velocipede    

Screw-drivers.    Disston's    electric    

Smoked   beef   shavers.    Enterprise's    

Squares: 

Disston's  try,  rosewood  handle 

Disston's  steel    

Traps.   Lovell's   rat   and  mouse   

Trowels,    Disston's   brick    

Vises : 

Armstrong's  plain  and  hinged   

Armstrong's  pipe     

Bonney's    

Wire,  spool,  Malin's  annealed  and  tinned 
% -pound  and  1-pound   


Export  discount 
from  list. 


Per  cent. 

70,  10.  10,  10.  and    5 
40  and    2 

45  and    7»^ 

45  and    7% 

40  and  10 

40  and  10 

50 

50 

70,  10.  and  10 

30 

70.  10.  10,  and  10 

40  and  10 

70,  10.  10,  10,  and    5 
45 
50 
45  and    7 ',2 

80  and  10 

60 

50 

70,10.  10,  10. 

10,  and    5 


Home  discount 
from  list 


Per  cent. 

60  and  10 
25  and    7\ 


30  and 
30  and 
25  and 
25  and 


I  V2 
7V2 
7V2 

30 

25 

60 

20 

70 
71/2 


60  and  10 
25,  71/..  and  10 
331/3 


60 

50 

no  and   in 

70,  10,  10 

5,  and    5 


Per 
cent 
differ- 
ence. 


331/3 
47 

122 
25 
26 
17 


PROTECTION 


179 


Taulk    II. — Showing    difference    hetivecn    export    and    home 
prices    of    certain    specified    articles. 

[The  prices  are  of  date  between  January  1  and  May  15,  1909, 
except  in  the  case  of  a  few  of  the  items  taken  from  the  Payne 
Tariff  Hearings,  as  indicated  by  reference  to  footnotes,  a  few  of 
which  items  are  of  1908.  Evei^y  price  is  of  the  same  date  as  the 
other   of    the    pair,    export   or   domestic,    in    comparison   with    it.] 


Articles   anJ   description. 


No. 


No. 


i"    coil   and  halter,   Xo.   6/0    ... 

coil  and  lialter,  Xo.    6/0   

1"   dog  leads,  aluminum,   size  4 
Xo.   1    


Go's 


r  dux 

$1.30 

2.92 

9.75 

13.00 

each 

1.71 

rlOO 

.60 

" 

.57 

AuKer   bits : 

Irwin's  solid    center,    4-16    

Irwin's  solid   center,    16-16    

Auger  handles,    Gunn's   Xo.    5    

Bird    cages,    Hendryx's   Xo.    316    

Bolt  clippers,   "Easy"  and   "New  Easy,' 
Bolts: 

Carriage,    %    by   6    inches    

Macliine,    %    by   4    inches    

Tire,    %    by   6   inches   

Braces: 

Fray's  genuine    "Spofford,"    Xo.    107 

Fray's  ratchet,   Xo.    81    

Fray's  ratchet,    Xo.    62    

Fray's  sleeve,    Xo.    207    

Fray's  sleeve,    Xo.    606    

Fray's  plain,     X'o.     306     

Brooms,    Columbia,    Xo.    6    a    

Bungliole    borers.    Enterprise, 

Can    openers,    "King"    

Chain : 

■"I'riumpl 

"Hrown" 

"Triumpl 
Ci.ffee  mills.  Enterprise 
Coik  screws: 

Walljer's  Xo.     28     ... 

Wallser's  Xo.     l«u     . 

Corn    starcli    b     

Kgg  beaters.  A..  &  J.  Mf; 
Files.     Xicliolsou's: 

.Mill  and  round  bastard,  3  to  4  inch   per  dozj 

MUl  and  round  bastard,   5-inch 

Mill  and   round   bastard,    6-inch 

Flat  bastard,    3   to   4    inch    

Flat  bastard,    5-incli     


Flat  bastard,  6-incli  . 
Flat  bastard.  7-inch  .  . 
Flat  bastard,  8-inch  . . 
Flat  bastard,  9-lnch  . 
Flat  bastard,  11-inch 
Flat  bastard,  13-inch  . 
Square  bastard,  3  to  4 
Square  bastard,  5-inch 
Square  bastard,    6-inch 


a  From   the    text    of   the   preceeding    pages. 

b  From    the    Payne    Tariff    Hearings    of    1908-9    quoted    in    preceding    pages. 


i8o 


FREE  TRADE  AND 


Table    II. — Shozuiiig    difference    between    export    and    home 
prices  of  certain  specified  articles —  Continued. 


Articles  and   description. 


Dif- 
fer- 
ence. 


Square  bastard,    7-inch    

Square  bastard.   8-incli 

Square  bastard,    9-lnch    

Square  bastard,  10-inch   

Square  bastard,    11-lnch    

Square  bastard,    12-inch    

Square  bastard,    13-inch    

Gauges: 

Disston's  comb,  steel   

Disstrn's  center    

Harness   snaps: 

"Trojan"    1%    loop    

"Yankee,"    IVs   loop    

"Derb.v."    No.     733     

Ice  picks.   Walker's  No.   104    

Ice  shaves.   Walker's  No.   52    

Lamp    chimneys : 

Macbeth's   No.    502    

Macbeth's    No.    504    

Lann    sprinklers.    Enterprise   No.    2    

Baker,  McMillan   Co.'s    "Eclipse"-    .... 
Baker,  McMillan    Co.'s    "Standard"    .. 

Levels,    Starrett's   24-inch   bench    

Lime   squeezers.    Walker's  No.    175    

Nails: 

Cut    b     

Wire  b    

Pipe   machines: 

Jarecki's  No.   6    

Jarecki's  No.    7    

.Tarecki's  No.   7  A   

Plumbs  and  levels,  Disston  No.  12   

Pocket  knife  and  tool  kit,   XJlery's   

Rifles: 

Stevens's  "Little    Scout,"    No.    14     ... 

Stevens's  "Maynard  Jr.,"   No.    14    

Stevens's  No.    16    

Stevens's  "Little  Krag,"   No.   65    

Stevens's  "Favorite"      

Sausage    stuffers,    Enterprise  No.    5    

Saws: 

Disston's  hand,    30-lnch,    No.   7    

Disston's  hand.    30-inch,    No.    16    

Disston's  combination.   No.    43    

Disston's  butcher,   24-inch,   No.    7    . . . . 

Disston's  framed  wood.    No.   60    

Disston's  band,    2-inch,    18-gauge    .... 
Barnes's  combined  scroll  and  circular 
Screws,   flat-head  iron   wood: 

Size,  %   inch,  Nos.    1   to   4    

Size,    %   inch,   Nos.    1   to   4    


.  t  o 
.88 
1.01 
1.26 
1.51 
1.82 
2.11 

.55 


per  gross  I     2.70 
2.90 
2.70 
.98 
12.57 


.40 
.50 
1.T6 
3.33 
2.05 
1.28 
6.71 

1.85 
1.90 


per  doz 


each 


per  doz 

per  cwtl 


each 


per  doz 
{)er  set 

each 


per  doz 


per  foot 
each 


1.09 

1.18   j 

1.41 

1.58 

1.94 

2.18 

2.67 

.62 
.19 

3.60 
3.98 
3.75 
1.50 
15.00 

.68 
.82 
2.10 
4.00 
2.65 
1.42 
8.00 

1.98 
2.13 


8.50 

6.00 

.157 

28.00 

I 

.034! 

.0341 


12 


33  Vs 

37 

39 

53 

19 

70 
64 
19 
20 
29 
11 
19 

7 
12 


61.20 

93.23 

64.80 

101.25 

160.00 

240.00 

5.82 

10.08 

1.15 

1.50 

1.35 

1.75   1 

1.80 

2.20 

2.00 

2.60 

2.50 

3.00 

3.47 

4.50 

2.20 

2.61 

13.74 

17.48 

15.39 

19.98 

15.26 

19.42 

11.90 

9.00 

.26 

32.00 

.073] 
.073' 


27 
28 

40 
50 
65 
14 

11-5 
115 


b  From    the   text    of   the   preceding   pages. 


PROTECTION 


i8i 


TAiiLF.  II. — SIio7ciiig  difference  between  export  and  home  prices 
of  certain  specified  articles. — Continued. 


Articles   and   description. 


DU- 
fer- 
ence. 


Screws,    flat-liead    iron    wood— Continued. 

Size,   V2    inch,   Xos.    1   to  3 per  gross 

Size,  %    inch,    No.    4    

Size,  %  inch.  No.  4   

Size,  1  Inch,    No.   20    

Size,  1V4   inch.  No.    18 

Size,  2  inch.   No.   24 

Size,  2V2    inch.   No.    10    

Size,  3   inch.   No.    12    

Size,  4   inch.   No.    26    " 

Size,  5  inch.    No.    18 " 

Size.  6  inch.  No.   20 

Screws,   flat-head   brass   wood 

Size,   M   incli.  No.  1 " 

Size,  %  inch.  No.   6 

Size,  1/2    inch.    No.    6 " 

Size,   %    inch,    No.    6 

Size,  %    inch,   No.    6    

Size,  1   inch.    No.    14 

Size,  2    inches.    No.     16     

Size,  3  inches,   No.   18    

Size,  4  inches.   No.   20   " 

Size.  5  inches.  No.   24 •' 

Size,  6   Inches,    No.    28 " 

Screws,   round-head  iron   wood: 

Size,   %    inch.    No.    1 " 

Size,  1  inch.  No.   6   " 

Size,  1%    inches.    No.    10    " 

Size,    1  %    Indies,    No.    16    " 

Size,  2    inches.   No.    16 " 

Size,  3  inches.   No.   18   " 

Size,  4   inches.    No.    26    •  •  • 

Size,  5    inches.    No.    26    " 

Size,  6   inches.    No.    28    •■•  " 

Screws,   round-Iiead  brasswood:  | 

Size,   %    inch.    No.    1    " 

Size,  1  inch.  No.   6    

Size,  114    inches.   No.    10    

Size,  2    inches.    No.     16    

Size,  3    inches.    No.    18    " 

Size,  4  inches.   No.   20 " 

Size.  5  inches.  No.   24 

Size.  6  inches.  No.   28    

Screw-drivers,   Disstou's   electric,    12-inch   per  doz 

Sewing   machines,    foot   a    each, 

Shoe  dressing:  | 

Whittemore's  "Gilt    Edge"     per  dozl 

Whitteniore's  "Baby     Elite" "      | 

Sluitguns :  | 

Steven's  No.    107    each 

Steven's  No.    225     " 

Smoked-beef   shavers.   Enterprise's  No.   23    " 


$   0.034 

$  0.073 

.038 

.076 

.04 

.079 

.192 

.355 

.182 

.385 

.34 

.649 

.128 

.243 

.192 

.334 

.792 

1.421 

.648 

1.116 

.96 

1.624 

.072 

.136 

.084 

.195 

.084 

.211 

.096 

.227 

.108 

.251 

.30 

.82 

.632 

1.738 

1.056 

3.241 

1.608 

5.005 

2.64 

8.74 

4.608 

13.479 

.034 
.06 
.10 
.192 
.228 
.4121 
.888 
1.248 
1.84 

I 
.072 
.16 
.336 
.768 
1.24 
1.872 
2.88 
5.76 
1.36 
22.00 

I 
1.20 
.60 

I 
3.00 
8.67 
4.32 


.087 
.112 
.17 
.341 

.378 
.67   I 
1.70 
2.194 
3.291 


100 

97% 

85 
112 

91 

90 

74 

80 

72 

69 

89 
132 
151 
136 
132 
173 
175 
207 
211 
231 
193 

156 
87 
70 
78 
66 
63 
91 
76 
79 


.168  133 

.329  106 

.776  131 

1.955  155 

3.646  194 

5.627  201 

9.83     241 

15.15     163 

1.86       37 

26.50       20 


1.75 
.67 

4.50 
9.75 
5.55 


a  From    the    text    of   the   preceeding   pages. 


l82 


FREE  TRADE  AND 


Tabi.k  II. — Shozving  difference  between  export  and  home  prices 
of  certain  specified  articles. — Continued. 


Articles    and   description. 


Export 
price. 


Home 
price. 


Sduares : 

Disston's  try,   rosewood,    10-inch,   No.   1    

Disston's  steel,   4-iiicli   

Steel  rails: 

Bessemer   standard   a 

Open  heartli  standard  a    

Sugar,    refined    a per  pound 

Traps,  Lovell's  mouse  and  rat,  metallic   per    gross 


per  dozl 
each 


per    ton 


Xo 


Trowels,   Disston's  brick,  8-liicli, 

Typewriters,    Underwood   a    

Vises : 

Armstrong's  hinged.  No.   1    

Armstrong's   combination,    with   leg   sockets    

Bonney's   No.    112    

Watches: 

Elgin  movement,   20-year  gold-filled  case   

Elgin  mOTement,  sllveroid  case    

Wheels,  carriage,  plain  grade  "A,"  per  set  of  4   

Wheels,   carriage,   Sarvin  patent,   grade  "A,"  per  set  of  4 
Wrenches,  Hawkeye  "5  in  1"    


per  doz 
each 


1.66 
1.10 


25.85 

28.00 

1  28.60 

31.85 

.026 

.0455 

5.50 

7.33 

4.07 

6.00 

74.25 

90.00 

1.80 
6.40 

2.25 


each 

7.98 

10.23 

3.04 

4.47 

8.00 

11.25 

21.00 

30.00 

per  doz 

3.60 

4.50 

From   the  text  of  the  preceeding  pages. 


11 

75 

331/3 
47 
21 


4.00   1122 
8.00      25 


Meaning  and  Effect  of  Low  Export  and  High  Domestic 
Prices. 

Domestic  Industries    Weakened   and   Discouraged 

The  great  mass  of  evidence  briefly  reviewed  here  from  a 
variety  of  reliable  sources,  oiificial  and  unofificial,  from  publi- 
cations and  directly  from  actual  business  transactions,  shows 
clearly  that  the  practice  of  selling  protected  American  goods 
cheaper  abroad  than  at  home,  to  which  the  Tariff  Reform 
Committee  first  called  public  attention  in  1890,  has  con- 
tinued right  along  to  date  as  a  very  general  business  custom. 
It  appears  to  be  reasonably  certain  that  the  great  bulk  of 
our  manufactured  goods,  amounting  to  practically  $490,000,- 
000  for  the  year  ending  June  30,  1908,  not  counting  the 
crude  or  partially  manufactured  goods,  are  sold  to  foreigners 
at  prices  much   lower  than   those  prevailing  in  this   country. 


PROTECTION  183 

It  is  clear  that  these  exported  goods  are  not  sold  at  a  loss, 
except  in  rare  cases.  It  is  also  certain  that  the  drawback  of 
duties  does  not  account  for  more  than  a  very  small  part  of 
this  foreign  selling  at  reduced  prices. 

This  discrimination  against  the  American  people  has  cost 
them  incalculable  but  enormous  sums  of  money  during  the 
past  twenty  years  in  the  differences  between  domestic  and 
export  prices  alone,  without  consideration  of  any  other  fea- 
ture. There  are,  however,  other  very  important  features  of 
this  matter,  the  meaning  and  effect  of  which  are  matters  of 
vital  concern  to  all  our  people. 

The  clear  meaning  of  these  facts  of  lower  export  prices 
is  that  our  tariff  duties  are,  and  have  long  been,  unnecessari- 
ly and  inexcusably  high,  even  from  a  protectionist  point  of 
view,  and  that  under  the  cover  of  this  excessive  "protection" 
trusts  and  combinations  have  grown  up  and  taken  control  of 
our  home  market  and  exact  exorbitant  prices  from  domestic 
consumers.  The  fact  that  an  industry  regularly  sells  its 
products  abroad  at  lower  than  domestic  prices  shows,  of 
course,  that  it  does  not  need  any  "protection,"  even  from  a 
protectionist  A-iew  point. 

The  effect  of  this  situation  is  that  our  citizens,  who  have 
generously  taxed  themselves  for  the  benefit  of  these  favored 
industries,  are  seriously  oppressed.  Manj^  domestic  indus- 
tries are  weakened  and  discouraged.  All  unprotected  ex- 
porters, whether  manufacturers  or  farmers,  are  seriously 
handicapped,  because  thty  are  compelled  to  pay  higher  prices 
for  materials,  machinery,  and  supplies  than  are  paid  by  their 
foreign  competitors.  Hence  the  "protective"  policy,  instead 
of  encouraging  home  industry,  is  really  encouraging  foreign 
industry.  In  fact,  largely  for  the  reasons  stated,  many  im- 
portant manufacturing  establishments  founded  and  carried 
on  by  American  capital  have  in  recent  years  been  located 
abroad  rather  than  in  the  United  States.  And.  finally,  this 
destructive  policy  leads  to  retaliatory  tariffs  on  the  part  of 
foreign  countries,  which  are  called  on  by  their  manufacturers 
to  protect  them  against  the  lower  export  prices  of  our  manu- 
facturers.    These  hostile  tariffs  and   trade  wars  therefrom  now 


\/ 


i84  FREE  TRADE  AND 

threaten   serious   damage    to   the  foreign   business   of  a  very 
large  number  of  American  industries. 

American   Industries   Being  Located  Abroad 

The  location  of  American  manufacturing  establishments 
abroad  is  a  largo  and  important  subject  in  itself,  and  can 
only  be  incidentally  referred  to  here.  Public  attention  has 
been  called  to  this  development  from  time  to  time.  Official 
mention  of  it  was  made  in  the  special  article  on  iron  and 
steel  in  the  Report  of  the  Bureau  of  Statistics  on  Commerce 
and  Finance  issued  in  August,  igoo,  the  same  article  from 
which  extracts  about  lower  export  prices  are  given  above  on 
pages  4  and  5  (of  pamplet  from  which  quotation  is  taken). 
Special  mention  of  the  development  was  made  in  the  pam- 
phlet, Export  Prices,  issued  by  the  Tarif?  Reform  Commit- 
tee in  October,  1904. 

Our  American  manufacturers  are  intelligent  and  enter- 
prising, and  those  who  found  their  efiforts  to  market  their 
products  in  foreign  countries  thwarted  by  the  unnaturally 
high  cost  of  materials  here,  and  who  also  found  that  the 
drawback  system  was  entirely  insufficient  as  a  relief,  quite 
naturally  took  the  logical  and  necessary  step  of  establishing 
branch  factories  abroad  for  making  goods  for  the  foreign 
trade.  Our  stupid  and  destructive  tariff  legislation  has  creat- 
ed a  constant  business  pressure  on  them  to  do  so,  for 
through  this  legislation  practically  all  the  requirements  of 
manufacture  except  labor  are  to  be  had  much  cheaper  abroad 
than  at  home,  not  merely  the  materials  of  foreign  produc- 
tion, but  also  practically  all  the  materials  of  American  pro- 
duction, like  the  iron  and  steel  products  and  other  materials 
mentioned  in  the  preceding  pages.  All  nations  gladly  receive 
additional  industries  settling  within  their- borders,  and,  since 
the  migration  of  a  number  of  important  American  industries 
years  ago,  several  important  European  countries,  taking  a 
quiet  hint,  have  made  one  more  move  in  the  great  game  by 
so  changing  patent  laws  as  to  require  manufacturing  within 
their  borders   for  the  preservation   of  patent  rights  therein; 


PROTECTION  185 

and   this   has  added  to   the  force  of  "protection"   in   driving 
American  industries  away  from  home. 

The  extent  of  this  movement  of  American  industries 
away  from  home,  and  the  effect  of  it  in  limiting  our  export 
trade  and  otherwise,  are  very  well  indicated  in  an  article 
written  by  a  prominent  Republican  and  protectionist,  Mr.  S. 
N.  D.  North,  until  very  recently  Director  of  the  Census. 
This  article  is  entitled  "The  Tariff  and  the  Export  Trade  of 
the  United  States,"  and  appeared  in  the  issue  for  January, 
1904,  of  the  Annals  of  the  American  Academy  of  Political 
and  Social  Science.  In  it  Mr.  North  shows  the  heavy  bur- 
den of  tariflf  duties  upon  wool  and  other  raw  materials,  and 
asserts  that  American  manufacturers  are  not  greatly  handi- 
capped by  the  higher  wages  here  because,  man  for  man, 
the  average  x\merican  workman  can  accomplish  more  in  a 
given  time  and  do  better  work  than  the  average  working- 
man  of  any  other  country,  and  can  thus  offset,  in  a  very 
considerable  degree,  the  difference  in  day  wages  between 
our  own  and  all  European  countries.  After  this,  Mr.  North 
goes  on  to  say: 

It  remains  the  fact  that  a  constantly  increasing  number  of 
our  great  manufacturing  corporations  are  constructing  vast  plants 
abroad  to  supply  their  foreign  customers;  and  of  course  they 
would  not  do  this  unless  experience  proved  there  was  an  advan- 
tage in  it.  I  have  before  me  a  long  list  of  these  establishments. 
It  indicates  that  more  than  $40,000,000  of  American  money  is  now 
invested  in  European  plants  devoted  to  the  manufacture  of  vari- 
ous American  specialties,  including  all  descriptions  of  electric  ap- 
paratus, sewing  machines,  belting  radiators,  shoe  machinery,  coal- 
conveying  apparaftis,  steel  chains,  machine  tools,  hoisting  ma- 
chinery, boilers,  pumps,  blowing  engines,  mining  machinery,  print- 
ing machinery,  elevators,  match-making  machinery,  pneumatic 
tools  and   photographic  apparatus. 

The  Western  Electric  Company,  of  Chicago,  111.,  is  interested  in 
extensive  factories  in  London,  Paris,  Antwerp,  and  Berlin,  not  all 
of  them  carried  under  the  name  of  that  company,  but  all  of  them 
established  and  controlled  by  its  capital.  The  General  Electric 
Company  has  three  or  four  such  establishments,  and  has  re- 
cently constructed  a  huge  new  factory  in  Rugby,  England.  The 
Westinghouse  Company  has  just  finished,  at  Trafford  Park,  in 
England,  one  of  the  largest  electric  factories  in  Europe,  employ- 
ing two  or  three  thousand  men,  and  it  has  other  factories  in 
Havre,  France,  and  St.  Petersburg,  Russia.  The  Singer  Sewing 
Machine  Company  has  three  large  plants  in  Europe,  under  its  di- 
rect control.  The  Chicago  American  Tool  Company  is  building  a 
plant  at  Frazerburg.  near  Aberdeen.  The  Howe  printing  presses 
are  made  in  London,  as  is  also  the  American  linotjT)e  machinery. 
The  Draper   Company   has    recently   completed   its   new   factory  In 


i86  PROTECTION 


Lancashire,  to  supply  the  greatest  cotton  manufacturing  district 
of  the  world  with  American  fast-running-  Northrup  looms.  This 
list  might  be  extended  indefinitely,  and  a  line  field  for  investiga- 
tion opened  for  the  full  measurement  of  this  remarkable  trans- 
plantation. 

Mucli  lias  been  written  about  the  invasion  of  foreign  manu- 
facturing capital  in  the  United  States  for  the  construction  of 
factories  to  supply  the  American  market  in  competition  with 
American  manufacturers.  A  great  deal  of  such  capital  has  found 
investment  liere,  particularly  in  the  textiles;  but  the  sum  total 
of  this  American  investment  of  foreign  manufacturing  capital  is 
a.  bagatelle  in  comparison  with  the  American  manufacturing  capi- 
tal which  has  found  investment  in  European  countries  within  the 
last  fifteen  years,  and  is  now  engaged  in  manufacturing  what 
is  known  as  American  goods  on  foreign  soil.  The  irruption  of 
American  wares,  of  wliich  tlie  foreign  manufacturers  have  com- 
l)Iained  so  loudly  of  late,  is  an  interesting  and  significant  phenom- 
enon in  connection  witli  the  question  under  discussion.  Far  more 
significant,  it  seems  to  me,  is  this  construction  of  American  fac- 
tories on  foreign  soil  to  construct  American  machinery  and  ap- 
pliances by  American  methods  in  direct  competition  with  the 
strongest  foreign  establishments  and  bold  and  avowed  deter- 
mination to  control  the  markets  of  the  world. 

Can  it  be  fairly  argued  that  the  protective  tariff  is  driving 
these  American  manufacturers  abroad  in  order  to  obtain  advan- 
tages for  competition  in  the  world's  market  of  which  that  tariff 
deprives    them    at    home? 

I  will  conclude,  therefore,  by  brief  allusion  to  an  aspect  of  the 
subject  suggested  by  the  remarkable  invasion  of  American  manu- 
facturing capital  and  enterprise  into  the  European  countries  for 
the  purpose  of  a  hand-to-hand  competition  on  their  own  soil. 
It  will  necessarily  result — it  has  already  resulted — in  a  large  dim- 
inution of  our  export  trade   in  American  manufactures. 

Instead  of  making  in  America  electrical  appratus,  cotton  looms, 
all  kinds  of  machinery,  tools,  etc.,  to  ship  abroad  for  sale,  our 
manufacturers  will  increasingly  produce  these  wares  abroad  for 
their  foreign  trade,  and  the  statistics  of  our  exports  will  be  cor- 
respondingly- reduced.  They  are  already  so  reduced  in  value  and 
amount  to  many  millions  of  dollars  every  year.  It  may  easily 
come  out,  in  the  course  of  time,  that  the  volume  of  our  foi-eign 
trade  in  manufactures,  instead  of  increasing  by  leaps  and  bounds, 
as  it  has  been  doing,  will  gradually  become  stationary,  and  even 
show  a  decline. 


UNIVERSITY  OF  CALIFORNIA  AT  UOS  ANGELES 

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